A construction mortgage is a loan borrowed to finance the construction of a home and typically only interest is paid during the construction period. Once the construction is over, the loan amount becomes due and it becomes a normal mortgage. The money is advanced incrementally during construction, as construction progresses.
Construction mortgages may be sought as a way to better ensure that most – if not all – construction costs are covered on time, usually preventing delays in the completion of the home. It is possible that unforeseen expenses may arise, increasing the overall cost construction