How Do New-Build Mortgage Draws Work in Alberta?
Last updated:
·Reviewed by a mortgage professional
Short answer
Some Alberta new builds use progress draws, where the lender advances funds in stages as construction milestones are met. This is different from a resale purchase, where the mortgage typically funds once at closing.
The plain-English version
Draw mortgages can involve inspections, builder milestones, interest during construction, and timing coordination between buyer, lender, builder, and lawyer. The structure depends on whether you are buying from a builder, building on your own land, or purchasing after completion.
GST, rebates, deposits, upgrades, and possession dates can all affect the cash plan. Confirm whether the posted price is before or after GST rebates are assigned.
Alberta-specific considerations
- Alberta has no provincial sales tax, but federal GST can be meaningful on new construction.
- Builder contracts may treat deposits, upgrades, and GST rebate assignment differently.
- Long construction timelines can outlast a standard rate hold, so ask about completion timing early.
Example scenario
A buyer building in Airdrie may need lender draws at foundation, framing, lock-up, and completion. Each stage can require inspection or documentation before funds advance.
Common mistakes to avoid
- Using a resale closing checklist for a construction draw file.
- Assuming the GST rebate is automatically available or already included in the price.
- Forgetting interest or payment obligations during the build period.
- Not checking whether the rate hold matches the expected completion date.