How to Finance a Custom Build: An Ontario Construction Mortgages Guide

Seventy Seven Park
May 15
3 min read

Custom home under construction in Ontario, showing framing and structure in progress

Building a custom home in Ontario is a dream for many homeowners, but financing that dream requires a clear understanding of how construction mortgages work. Whether you're planning your forever home or developing a unique property for resale, this guide explains the essential steps and options available for custom home financing in Canada.

At Seventy Seven Park, we don’t just help you secure a construction mortgage—we become your partner in the entire process. From land acquisition to project completion, our financing and development services are designed to make your vision a reality.

Start your mortgage application today and take the first step toward building your custom home.

What Is a Construction Mortgage?

A construction mortgage in Ontario is a specialized loan that provides funding in stages as your custom home is being built. Unlike traditional mortgages, where the full amount is disbursed upfront, construction loans release funds at various milestones throughout the construction process.

Initial draw for land or demolition
Progress draws after foundation, framing, and roofing
Final draw upon completion and occupancy

This staged release reduces lender risk and ensures funds are used efficiently.

Key Types of Construction Mortgages

1. Completion Mortgage

You receive the full mortgage amount only after the home is fully built. This is common for builder developments.

2. Draw Mortgage

Funds are advanced in intervals. This is ideal for self-managed or custom builds, where costs are incurred in phases.

Steps to Secure a Construction Mortgage in Ontario

Step 1: Plan Your Budget

Include hard costs (materials, labour) and soft costs (permits, architecture, legal). If you're unsure where to start, our advisors can help you map it out.

Step 2: Choose the Right Builder

Lenders prefer experienced, reputable builders. Request a detailed cost breakdown and construction timeline. We can connect you with vetted partners or help you evaluate your builder's proposal.

Step 3: Secure a Pre-Approval

Work with a mortgage broker who understands construction financing. Pre-approval helps you lock in rates and align with lender expectations.

Click here to get pre-approved now

Step 4: Submit Your Application

You’ll need:

Signed building contract
Draw schedule
Appraisal based on plans
Building permits

Step 5: Monitor Construction Progress

Lenders typically require site inspections before releasing each draw. Be prepared for regular reviews and milestone tracking. Our team at Seventy Seven Park works alongside you to manage the schedule and keep the lender engaged.

Pros and Cons of Construction Mortgages

Pros:

Tailored to your custom build
Interest-only payments during construction
Flexible draw schedules

Cons:

More paperwork and inspections
Higher lender scrutiny
Variable interest rates may apply

Final Considerations

Always build with a contingency budget (10–15%)
Work with legal and financial professionals experienced in development financing
Understand zoning, HST implications, and how the final mortgage transitions post-completion

Custom builds are complex, but they don’t have to be daunting. With the right financial tools and a partner that understands the entire development cycle, you can build smarter and stronger.

Explore how our development services can help you take your project from blueprint to reality.

Start Building With Confidence

At Seventy Seven Park, we specialize in guiding clients through the custom home journey—from financing to project delivery. Whether you're a first-time builder or a seasoned investor, we bring insight, strategy, and partnership to every phase.

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