Parade of Homes

• Turn-key mortgages, for cases in which the builder finances construction. Typically, the builder requires an initial deposit upfront and transfers title on the possession date. Unlike a contract build, which only requires the buyer to pay land-transfer tax on the land, a turn-key mortgage requires the buyer to pay land-transfer tax on the land and the house. But there are fewer fees for appraisals and so on, so at the end of the day, there might be little or no difference in costs. • Contract builds, for cases in which the buyer is paying a builder or contractor to oversee construction. The contract outlines a schedule of payments and funds are advanced as each construction stage is completed — when the foundation is poured, when the roof is complete, and so on. The buyer may make interest-only payments for 18 months, even if the house is completed in less time. When you sell your current home, you have an option to make a one-time lump-sum payment on the principal of your mortgage over and above the 20% lump-sum payment SCU allows without penalty each year. • Ready to Move (RTM) mortgages, for people who are buying a mobile home that will be moved to a permanent location, or a modular home that will be assembled on site. • Assumption mortgages are only available with certain builders, and there are benefits to both the builder and the buyer, with savings on appraisal, registration and legal fees. In this case, the builder has a commercial mortgage at SCU on the property, and title is transferred directly to the buyer. Normally, a deposit is made to the builder upfront, but there are no draws during the construction phase. • Self-build mortgages, for people who have extensive experience in construction trades and who can complete all or most of the build themselves. Advances are paid at different stages of construction and members are required to pay interest on the amounts advanced. As with a contract build, the buyer has a one-time option to make a large lump-sum payment on the principal of the mortgage, over and above the annual 20%. POH MONEY MATTERS Steinbach Credit Union offers five types of builder mortgage: MORTGAGES 101 Builder 116 Parade of Homes FALL 2021

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