I want to build a small home on my 1 acre piece of land. How do you finance it?

Answer 1

Go to a loan officer at your bank or mortgage broker or mortgage company.

They will arrange for a professional survey and an appraisal of your one acre parcel (at your expense).

They will then arrange construction financing for your small home with your lot as security; also assuming you have qualifying income in addition to the value of the lot.

When construction is completed, they will then arrange mortgage financing with the home and lot as collateral for the loan to pay off the construction loan.

Your equity (appraised value of) in the lot will help you qualify for the mortgage loan. For example, if the lot is valued at $43,000 and your construction loan is for $157,000, you are borrowing about 79% of the total value of the property. Again assuming that you have qualifying income to repay the loan, this will be a very good risk for the bank and you should get an excellent interest rate on, say, a fifteen or thirty year home mortgage loan.

Of course there would be closing costs on the loans so be prepared to have cash to cover these costs at the time of settlement on each of the two loans.

Answer 2

If you are a first time home buyer in Canada.....

The Home Buyers' Plan (HBP) is a program that allows you to withdraw up to $20,000 from your registered retirement savings plan (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability .

Your RRSP issuer will not withhold tax from the funds you withdraw if you meet the HBP conditions.

Your first repayment is due the second year following the year in which you made your withdrawals.

Each year, CRA will send you a Statement of Account with your Notice of Assessment or Notice of Reassessment. The statement will include: the amount you have repaid (including any additional payments); your balance for the HBP; and
the amount of the next repayment you should make.
You have up to 15 years to repay the amount that you withdrew under the HBP. Generally, for each year of your repayment period, you have to repay 1/15 of the total amount you withdrew until the full amount is repaid to your RRSPs.

http://www.cra-arc.gc.ca/tax/individuals/topics/rrsp/hbp/menu-e.html

Answer 3

If you own the land you can use it as collatoral on a construction loan. If you know what you want to build...take the drawings and ideas to your local bank.
They normally like to do short term construction loans.

Answer 4

There are one time close construction loans available for new construction. But it depends on the details. Feel free to email me & we can go over.

Best Regards,

Anthony
www.lowermydebtnow.com
[e-mail]