What is a construction draw mortgage?
A ‘Draw Mortgage’ or ‘Progress Advance Mortgage’ allows the builder to be paid a portion of the purchase price of the home at certain stages of construction. These stages are predetermined and specified by the lender. Alternatively, a ‘Completion Mortgage’, is one single advance paid to the builder upon possession date. This type of mortgage is most common when purchasing a home that is already completed or nearing completion within 120 days. Most lenders will not hold a rate for longer than 120 days.
