Construction or Progress Advance Mortgages are loans, which provide homeowners with prorated advances during the construction of their house or to complete a major renovation project requiring multiple advances.  Progress advance mortgages are also commonly known as “draw mortgages”.

Advances
Progress Advance mortgages are designed to advance funds to the Borrower throughout the construction phases. The Borrower can draw down funds at pre-determined stages during the construction. Funds are advanced based on the Borrower injecting their own money (equity) into the project first, before the lender releases any funds.

The typical advance stages are as follows:
1) Foundation stage 25%±.
The foundations are in place and backfilling is complete, plus work is being done on framing.
2) Walls-up is generally at the 40%± completion stage.
The property now has limited access as doors and windows are installed, and the roof is on.
3) Roof Tight is approximately 65%± complete.
Drywall is installed and taped with lighting and electrical 90% complete. The furnace and water heater are installed and functioning.
4) Home is 100% complete (subject to seasonal holdbacks).
Home has been inspected and the occupancy certificate has been issued.

At each stage, a specific percentage of the building funds are advanced based on a cost to complete basis and always supported by an inspection report from an approved appraiser. Funds are directed to the Borrower’s lawyer (insured loans only) who insures that the appropriate construction lien holdbacks are maintained, prior to releasing funds to the Borrower or builder.