For many, seeking a new home is a process of constant compromise. The wish list for an ideal residence in a prime location may include striking architecture, stunning views, a professional-grade kitchen, coach-house garage and other amenities. However, finding a home in the right location — with the right combination of space, utility and comfort — this can be very difficult in today’s current market. 

The conversations I’ve had with clients over the years underscores the difficulty of finding the perfect home, but especially now more than ever. The U.S. housing market is historically tight¹ and demand remains strong while the supply of available homes is low. As a result, many prospective buyers are electing to build new homes or renovate existing ones, rather than settle for what is available on the market. The good news is: we can assist with this endeavor. 

A construction loan that makes homebuilding easier

When you finance your home build with CIBC, we offer a one-close loan solution² — also known as a construction-to-permanent loan — that provides interest-only non-revolving lines of credit for the construction stage of the loan, and then converts into permanent financing over the remaining life of the loan once the home is complete. There is no need to finance a new permanent loan once the build is finished. 

Our clients find these loans particularly attractive because they streamline the borrowing process. They reduce the time spent on applications and closings, have lower fees and costs than a multiple-loan option, and they provide competitive locked-in rates. 

In addition, you will have an experienced loan administration team that will assist with the construction process and budget reviews, conduct inspections to confirm work progress, facilitate contractor payments, and provide oversight to protect against liens. Of course building a home comes with its challenges — as many rewarding life endeavors do — yet a one-close loan solution and our expert team can really help reduce stressors.

Getting the financing right is critical

While some choose to pay the cost of homebuilding outright, others prefer to finance some or part of the build. Here are some further considerations for when you finance with CIBC:

• Project oversight: Our construction administration team provides additional project oversight to ensure the project proceeds smoothly and will be finished in a timely way.
• Keep your cash liquid: A construction loan allows you more liquidity to maintain your savings and non-liquid assets. You can always choose to pay down the principal anytime during the course of construction or prior to final draw.
• Self-financing risks are mitigated: Cost overruns and project delays create headaches when building a home. Homebuilding requires upfront capital and ongoing cash infusions to cover expenses (architectural fees, contractor fees, material costs, and other expenses). Setting aside sufficient assets at the start of the project may impede personal liquidity, and not setting aside assets can lead to project delays. 
• Ducks in a row: You will have financing in place before the project is complete, mitigating surprises and giving you the confidence to forge ahead.

We know that building your dream home will  be a huge undertaking . But with an experienced team — architect, general contractor, lender — to provide insight and support, the endeavor can deliver an amazing home and additional peace of mind.

If you are considering building a home or renovating an existing residence, and you have questions about the process and whether or not to finance, please get in touch with us. CIBC has a construction loan that makes the homebuilding process easier. We are happy to share our knowledge and help customize a solution that best meets your needs. Visit our website to learn more about CIBC Private Banking today. 

Wendy Barbera is a managing director for CIBC Private Wealth and the residential construction loan administrator, with more than 25 years of industry experience.

1 Source: https://www.redfin.com/news/q1-2024-luxury-report/
2 CIBC Private Wealth consists of services provided by CIBC and certain of its subsidiaries: CIBC Private Banking; CIBC Private Investment Counsel, a division of CIBC Asset Management Inc. (“CAM”); CIBC Trust Corporation; and CIBC Wood Gundy, a division of CIBC World Markets Inc. CIBC Private Banking provides solutions from CIBC Investor 736 Services Inc. CIBC Private Wealth services are available to qualified individuals. The CIBC logo and “CIBC Private Wealth” are trademarks of CIBC.