Understanding what goes into a construction mortgage will be extremely important if they are comes a time that one is going to have a home built from the ground up and on land that is either bought or already owned. This type of mortgage can come in really handy when financing such construction and land purchases as may be necessary, there are a number of steps and features that should be examined.

To begin with, a typical construction mortgage is of short duration. Known as a short-term mortgage, it usually runs no more than three years. It is a form of real estate financing and is secured by a mortgage on the home or property being financed. It is specifically meant to cover various costs, which usually revolve around the cost to develop the land and to build the structure.

It is an excellent way to build on land or build or renovate a home that already exists before moving into it. This sort of mortgage can make sense for those who are “cash poor” and do not have large sums of money to put towards the construction of a home built from the ground up. These kinds of mortgages allow a borrower to obtain a significant portion of the total cost of the construction project.

Much better rates are available on these mortgages in the case where a person has need of a relatively small amount of funding in order to engage in improvements to a home prior to obtaining a certificate of occupancy from the local municipality, also. There are several different variations of this kind of mortgage, with a common one known as “construction to permanent loan” financing.

It can make for an excellent way to avoid paying double closing costs — because you will only be paying closing costs one time — and the construction loan will become a traditional mortgage once construction has been completed and a certificate of occupancy obtained. This sort of loan also allows the borrower to lock in a permanent rate at the beginning of construction.

This last feature is particularly outstanding, as there have been many persons who have obtained these kinds of mortgages who have later been able to avoid a significant increase in the mortgage interest rate when the construction was completed. More traditional forms of this mortgage, carried out in two stages, would see the new mortgage being executed at a significantly higher rate.

One thing to keep in mind with a construction mortgage regardless of the type is that the contractor building the home, the borrower and the lender will need to make arrangements for a payment schedule that will be effective and mutually beneficial to all three parties. Usually, this loan is dispersed as each stage in the construction has been completed. Still, make sure of when payments are due.

In almost every case, it makes financial sense to keep all mortgage activity with the same lender. In other words, try to avoid taking out a loan for construction from one lender and then a separate long-term mortgage from another lender because each will charge you fees that can add up to a significant amount. A construction mortgage makes for an excellent way to get a home built from scratch.

Who hasn’t dreamed of owning a brand new home, custom-designed to their own personal tastes? I think we’ve all been there. Buying new offers many benefits, and includes some unique financing options.

First, the benefits.

Advantages of Building New

According to sources like the Canadian Home Builders’ Association and others, here are some of the main advantages of buying a brand new home:

Greater resource efficiency. While older homes may have character, they may cost more to maintain because they were not built according to today’s energy standards. New homes are built with features that greatly enhance energy efficiency, including better windows, better insulation and high-efficiency heating and cooling systems. Low-flow showers and toilets also reduce water usage in new homes. Customization and modern designs. When it comes to completing your home, the choice is yours. New homes offer modern, open-concept layouts that maximize the space in your home. To customize the home to your liking, you can choose flooring, cabinetry, faucets and more. Safety features. The safety of your home is increased with the inclusion of features like hard-wired smoke detectors and safety glass. Warranties. Unlike resale homes, new homes come with warranties. The fine points vary according to the builder, but all reputable builders offer a post-sales warranty period in which problems will be repaired. Selecting the builder and seeing how your home is built. You can shop around until you find the builder that meets your needs, and you can see exactly what goes into your home. If you have any questions, the builder will be happy to answer them. A focus on community. If you are buying a home in a brand new development, you can take comfort in the new emphasis on community building that permeates these neighbourhoods. Developers are including in their plans amenities like green space and children’s playgrounds that foster a sense of community.

Financing for New Homes

Whether you are building your own home on a piece of land you own, or buying within a new subdivision, there are specific construction financing products available to you. These products fall into two categories, explained below:

Progress Draw Mortgages – The funds in these mortgages are advanced at specific stages of building, usually at 35%, 65% and 100% completion. At each stage, an inspection will take place to ensure that things are progressing as they should. Completion Mortgages – With a completion mortgage, money is advanced only when the home is finished. Down payments are required, but are typically paid in stages.

If you are buying your first brand new home, these kinds of mortgage products will be new to you. For assistance in understanding how these mortgages work and which one is best for your situation, it is best to speak with a mortgage professional before you sign a deal so you are fully aware of how much you can afford and how your payments will be structured.

One of the funniest movies I ever saw was “The Money Pit” starring Tom Hanks and Shelley Long. They play a newly married couple wanting to buy a house but can’t find anything in their price range. When they find a beautiful old mansion that is selling for a ridiculous price they buy what they think is their dream house.

Once they move in the house starts falling apart everywhere and they have no choice but to remodel the entire structure. The rest of the movie is devoted to the many problems they encounter during the remodeling project. From dealing with no water to missing staircases this movie is admittedly an extreme scenario of what could happen while remodeling.

The good news is this is one example where life does not imitate art and most people that are thinking of remodeling their home will not have anywhere near the experience Tom and Shelley had if they plan accordingly.

As you are most likely not in a situation where a complete house remodeling is needed right away you will have some time to decide exactly what it is you want to accomplish. Do you need another bathroom or maybe you want to add an extra stall in your garage?

These are questions you will need to answer up front before you start any work. Write down on paper what it is you want and make a drawing you can show the contractor. You might want to consider buying some home remodeling software for your PC as these packages are reasonably priced and can be used for just about anything from building a new house to room additions.

Unless you are handy and are going to do the work yourself once you have your plan you need to find a reliable contractor. This is much easier said than done and you would be well advised to talk to at least three before making a decision. Get references and check them out and try and inspect some of their previous work. Asking your acquaintances if they can recommend someone can be a safe way to pick a contractor that you will be happy with.

Get a general project estimate from each contractor and if it’s more than you wanted to spend consider using less expensive materials or scaling down the project some. Be very suspicious of anyone that says they can do the project for an amount that is unrealistically lower than your other estimates.

Next, you need to set a realistic budget that you must adhere to making sure to pad the budget with a little extra for the inevitable problems that will crop up. Be sure to get everything in writing in case you have any serious problems during the project. By having everything spelled out as to the scope of the project and when it will be completed you will be in a better legal position if there are problems. Don’t be afraid to consult with your attorney if this is a large project with a lot of money at stake.

If you lack the cash and need to finance the project with a home equity loan you might want to ask yourself if you really need to be doing this remodeling project at this time. By waiting until you have saved up a bit more money you could save quite a bit in finance charges.

If you do your homework and plan everything up front your remodeling project should be completed on time and on budget giving you the results you desired when you first started the process.

The 20th Annual Sunday Times Rich List is out. Despite mutterings of property downturns and house prices falling, property tycoons and landowners make up the biggest group. And that’s good news for builders. Yes, house prices may be down and commercial property values falling, but 231 of the 1,000 richest people in Britain are making their fortunes in property.

In fact one property owner is the third richest person in the country. The Duke of Westminster is worth a staggering 7 billion pounds, thanks to his ownership of large parts of Britain including much of London’s Belgravia. He stepped down as Chairman of Grosvenor Group in 2007 but is still enjoying massive financial rewards from the estate.

Other property owners include David and Simon Reuben who have land worth over 2 billion pounds in the UK and are 10th in the rich list. The Earl of Cadogan who comes 17th is the proud owner of 90 acres of Chelsea. Others are based in the UK but have made their fortunes in property abroad. Lev Leviev comes 21st. He is a Russian property developer, making the most of recent economic liberalisation in that part of the world. Poju Zabludowicz is 31st with the dubious honour of owning 40% of downtown Las Vegas, including several casinos. The brothers Sir Adrian and Sir John Swire have made millions from the Hong Kong property market and are now involved in property developments in China worth 7.5 billion pounds.

Several wealthy UK property owners are working hard to improve their areas, which will provide ample work for the UK building industry. Baroness Howard de Walden renovated 92 acres of her Harley Street estate and is now part of the 1 billion pounds regeneration project to transform Rochester in Kent. John Whittaker is 47th in the rich list and is planning to spend 5.5 billion pounds developing Liverpool’s Central Docks while Viscount Portman is planning a renovation of Portman Square in London which comprises 110 acres. So certainly there is a lot to look forward to in terms of land and property improvements in the UK in the next year or so, and opportunities for our builders.

There are certainly other signs of optimism – Eddie and Sol Zakay are London developers who have diversified internationally. They say they are on a global spending spree and that ‘cash will be king in 2008′.

But it’s not just the UK’s luckiest landowners who are optimistic about the property market. The construction industry is not doing badly either with several of the top 250 richest people in Britain within this category.

In at number 81 are Kevin and Michael Lagan. They have made their fortunes in construction around the world, including extensive road building projects in their native Northern Ireland. At 110 Keith Miller’s Edinburgh based construction group is doing well and just behind at 112 is David Wilson, with a 729 million pound fortune who describes himself as a Leicestershire based builder.

Terry Bramall is the 184th richest person in the country. His company is the UK’s biggest regeneration specialist and the largest provider of social housing in the Midlands and the North of England. While nobody would pretend he is anything but a businessman, it’s good to see that socially beneficial construction projects are profitable too and can attract UK entrepreneurial talent.

Big, municipal projects pay well too of course. Ray O’Rourke just makes it into the top 200, largely helped by his company Laing O’Rourke winning a 1.8 billion pound contract in 2007 to build Heathrow’s new terminal 2.

And at a more domestic level, Brian Kennedy comes in at 251 with his home improvements empire which has helped him net a 350 million pound fortune.

Construction and property are sectors which may have times of slow-down but they will always be necessary and relevant throughout the world. Many millionaires famous for their success in other sectors, for example the media tycoon Richard Desmond and the consumer electronics multi millionaire Sir Alan Sugar have also invested heavily in property over the years, contributing significantly to their wealth. So if these business icons are willing to risk their hard earned cash on the property market, builders can feel positive too.