New Build Mortgage

A new build mortgage, also called a progress-draw or construction mortgage, releases funds to a borrower in stages as each phase of home construction is completed and verified by a lender-approved inspector. Once the home receives an occupancy permit from the local municipal authority, the outstanding construction loan balance typically converts into a conventional, amortizing mortgage. This staged-funding structure protects both the lender and the borrower by ensuring money is advanced only for work that has been satisfactorily completed. Borrowers should confirm the specific draw schedule and inspection requirements with their lender before signing.

Yes, the federal Goods and Services Tax (GST) applies to the purchase price of newly constructed homes in British Columbia because new residential construction is a taxable supply under the Excise Tax Act (Canada). Purchasers may qualify for the federal GST New Housing Rebate, which reduces the GST payable when the home is intended as a primary place of residence and the purchase price falls within the eligibility thresholds set by the Canada Revenue Agency. BC does not impose a separate provincial new-housing GST component beyond the federal framework, unlike some other provinces. Buyers should consult the Canada Revenue Agency or a qualified tax professional for current rebate thresholds and eligibility conditions.

Under the BC Property Transfer Tax Act, the Newly Built Home Exemption may eliminate or reduce the Property Transfer Tax (PTT) otherwise payable when a buyer purchases a newly constructed home that has never been occupied. As of 2026, the full exemption applies to newly built homes with a fair market value at or below $1,100,000, with a partial exemption available on values above that threshold up to a specified limit. The home must be used as the buyer's principal residence, and the buyer must be a Canadian citizen or permanent resident. Buyers should verify current thresholds and eligibility conditions on the BC Ministry of Finance website, as these figures are subject to legislative amendment.

Yes, if the newly constructed home meets the eligibility criteria under the BC Property Transfer Tax Act's First-Time Home Buyers' Program, a qualifying first-time buyer may receive a full or partial PTT exemption regardless of whether the purchase was financed through a new build mortgage. As of 2026, the full exemption applies where the fair market value of the property does not exceed $835,000, with a partial exemption available for values modestly above that threshold. The buyer must have never owned a principal residence anywhere in the world and must occupy the home as their principal residence within a prescribed period. Buyers should consult the BC Ministry of Finance for precise thresholds and occupancy requirements.

A real estate licensee representing a buyer or seller in a new build transaction must comply with the Real Estate Services Act (RESA) and its Rules, overseen by the British Columbia Financial Services Authority (BCFSA). Licensees are required to disclose their agency relationships, provide accurate material information about the property, and ensure all remuneration arrangements comply with RESA Rules. When acting for a buyer on a presale or new build contract, a licensee must explain the staged nature of a progress-draw mortgage and any conditions that may affect the buyer's obligations. Licensees must not provide mortgage advice beyond their licensed scope, and should refer clients to a licensed mortgage broker or lender for financing details.

When a new build mortgage funds the construction of a strata lot in British Columbia, the completed unit must receive a strata plan registration under the Strata Property Act (SBC 1998, c. 43) before the strata lot can be conveyed to the buyer and the construction loan converted to a conventional mortgage. Upon completion, the buyer becomes a strata lot owner subject to the strata corporation's bylaws, common property obligations, and any applicable contingency reserve fund contributions. Before finalizing the purchase, buyers should request the strata's Form B (Information Certificate) under the Strata Property Act to understand any financial obligations, existing bylaws, and strata fee amounts. New strata buildings may also be subject to depreciation report requirements under the Strata Property Act Regulation once the strata corporation reaches the prescribed age.

Constructing a new residence on land within the Agricultural Land Reserve (ALR) in British Columbia may require prior approval from the Agricultural Land Commission (ALC) under the Agricultural Land Commission Act (SBC 2002, c. 36), depending on the nature and use of the proposed building. The ALC imposes restrictions on non-farm use, subdivision, and non-adhering residential use within the ALR, which can affect whether a lender will advance funds under a new build mortgage for a structure that has not received the necessary ALC approval. Buyers and builders should confirm with the ALC directly whether their intended construction requires an application for non-farm use or other authorization before committing to a construction financing arrangement. Proceeding without required ALC approval can result in enforcement action and may jeopardize the lender's security.

Personal information collected from a borrower or property buyer during the new build mortgage process — such as income details, credit history, and identification documents — is subject to BC's Personal Information Protection Act (PIPA), which governs how private-sector organizations collect, use, and disclose personal information. PIPA requires that organizations collect only the information reasonably necessary for the identified purpose and that individuals provide meaningful consent before their information is collected or shared. If a real estate licensee collects personal information as part of facilitating a new build transaction, they too must comply with PIPA's requirements. Separately, any unsolicited commercial electronic messages sent in connection with new build marketing must comply with Canada's Anti-Spam Legislation (CASL).

If a borrower with an outstanding new build mortgage dies before construction is complete, the mortgage debt becomes a liability of their estate, which is administered according to the Wills, Estates and Succession Act (WESA) of BC. The executor or administrator of the estate would be responsible for managing the mortgage obligations, including any further draw advances, from estate assets or through communication with the lender. Whether the construction project continues, is sold, or is wound down will depend on the terms of the will, the estate's financial position, and the lender's rights under the mortgage agreement. Parties involved should seek independent legal advice regarding both WESA obligations and the contractual terms of the construction mortgage.

British Columbia does not use a power-of-sale process to enforce mortgages; instead, mortgage enforcement is conducted through a judicial foreclosure process governed by the BC Supreme Court Civil Rules and the Law and Equity Act (RSBC 1996, c. 253). If a borrower defaults on a new build mortgage, the lender must commence foreclosure proceedings in the BC Supreme Court, which may result in an Order Nisi, a redemption period, and ultimately an Order Absolute or a court-supervised judicial sale of the property. This judicial process is more time-consuming than power-of-sale regimes used in some other provinces, and the court retains discretion to protect the interests of both lender and borrower. Lenders and borrowers facing default situations on construction loans should seek independent legal advice promptly.