The construction mortgage demystified (part 1 of 2)

I have been bugging Mark to write this post for a long time now. Fortunately/unfortunately he's too busy trying to get our house built. Thought I’d give it a shot. Not a bad idea for me to do anyhow, seeing as how it will probably bring clarity and ensure that I actually understand it too! I should be able to explain it or I have no business getting one.

As a disclaimer: every mortgage is unique, and I am in no way an expert. This is simply how it is working for us. Also, don't be discouraged if you don't understand it first time 'round. We met with our bank earlier this week and our banker had to ask another banker how it worked, and then we all figured it out together using a good ol' fashioned paper and pen.

So here goes.

Step 1: estimate project cost (A + B = C)

Rewind to a year and a half ago. When the land went up for sale. Before we put our offer on the land, we spoke to a construction mortgage specialist at Desjardins. Working with hypotheticals, guessing a best and worst case scenario for the sale of our home at the time, he was able to help us figure out how much money we might have to work with (C). At the same time, Mark and I were formulating ideas as to what kind of house we wanted to build on the lot (i.e. how big) and used a basic cost per square foot to help us do the math on the build (A). (I think we used around $250-300/sq.ft). In the simplest terms, the cost of the land (B) + the cost to build (A) would equal our project total (C) and therefore how much our construction mortgage application would be for.

The numbers were a uncomfortably high. But compared to the prices of older fixer-uppers and newer infills in the neighbourhood, there was no question: we had to do it. (We also wanted to…) When Mark and I decide we’re going to do something, we do it. There’s no half way for us. The land across the street was the only place in the city we wanted to be. There apparently was a competing bid on the land, so we made sure ours was adequately high and wrote a sympathetic letter to the neighbours selling the lot, hoping to warm up the offer.

It was accepted (yay) with a three week condition, which was based on the next step of the process: getting the bank to approve us for the construction mortgage. 

Step 2: get approved

In order for the bank to dish out the funds, we had to show them we could actually build a house on the land that would be appraised at a high enough value to warrant dishing them out. This meant that in three weeks time, we had to design a house, estimate the cost to build said house and get it appraised…Or else we’d lose the land. 

I might just add here that we were at a bit of an advantage because of Mark-itect. I wouldn’t normally suggest (and neither would he) that you design a house over the course of a weekend. But like I said “when we decide we’re doing something…”

Working around the clock, Mark and I designed a house. It was a good house. One that a has since evolved, but the basic program remains (and should theoretically be appraised at the same value). Mark was able to cost the build for us.* The bank appraised it at exactly what we were hoping they would.

• This is where you want to enlist the services of a professional, be it an architect, builder or developer. Because the bank will not be satisfied with you ball-parking your build cost as a layman. Neighbours of ours up the street are GC’ing their own infill house, similar to ours, but neither are industry professionals. Which means the bank required 3 quotes from every single trade (from framers to painters), prior to approving their mortgage. A heck of a lot of work. I suppose if you didn’t have the three week condition, as we did, this task would be less daunting. Nonetheless.

Step 3: get approved...again

Because our “downpayment” would be less than 20%, our mortgage needed to be CMHC approved. Our Desjardins construction mortgage specialist, Etienne, forwarded on all the relevant information to CMHC.

Finally, we got the green light from both and the land was officially ours. Validation complete. It was a stressful three weeks, to say the least. 

Now that we’re finally approved, moving on to part two of this series, how it all works.

Permit pending

After submitting our drawings, we had an incredible turnaround from the city -- only 2 days! Our plans examiner responded with a small list of items that needed clarification and/or revisions. Mark has since addressed them (all but one, which we're hoping won't hold up the permit) in a follow-up. By the end of this week, there will be one of two possible outcomes: 1) she has more questions or 2) she gives us our permit. We will be flabbergasted if it's the latter, but are hopeful.

This week we are meeting with our excavators, and the bank, setting up builders risk insurance, getting some trees chopped down, gathering more quotes, ordering site fencing, toilets and waste bins, and a whole slew of other things of which I will go into more detail on with all due haste.

Building permit submitted

Mark submitted our drawing set to the city last Friday. Engineer-stamped and everything. Cause for celebration. HOORAY! Only a year behind schedule. I had some friend remind me today, however, that we're not building a developer home here. Our expectations of how fast a house can be designed and built may be a bit skewed. This ain't that kind of house. We're playing the long game.

Hopefully we'll get a quick turnaround and an open-minded official overseeing our project. We're trying to do something different. And that can be scary to some.

Meanwhile, I'm in Vancouver with our daughters, visiting my sister. It's such a wonderful city. We've often thought about moving to Vancouver. Still do. It's such a wonderful city. Leading the world in healthy living. Building a passive house out here would be 'easy peasy' and a natural fit with the more moderate climate. If we can make it happen in Ottawa, we can make it happen anywhere. 

My dad

So I came across my dad's thesis in our storage locker last week. "Towards an architectural co-existence with the sun". I'm guessing this was around 1977 (?). He was always ahead of his time. Writing about passive principles and solar voltaics. 

He was a strong voice. One could argue, the father of green building in Canada, as we know it today. One of his first employees, Oliver, worked on the Saskatchewan House, renown in Passive House circles. In the early 90s, he was responsible for Ottawa's Minto-built Innova House, one of the country's first R-2000 houses and the first that contributed electricity back to the grid with its solar panels. He also brought the Energy Star program up to Canada and wrote the first iteration of the program. These programs, and their ease of adoption for developers have had large-scale impact on the quality and energy efficiency of the housing industry overall. One off homes, like ours, are great, but if we want real impact, it's made through existing channels and large developers, like Minto. 

When you're a kid, your parents are just your parents. What, they had lives before you came around? Only later in life were we getting glimpses at who my dad was before we came along and what he actually did 9 to 5. I'm so proud. Sure wish he was around to see us through our build. Miss you dad. 

Windows waiting for a home

So there may not be a hole in the ground yet (or even a building permit in hand), but our beautiful Gaulhofer windows have landed on Canadian soil. They are being held for us until the building shell is ready to receive them. The window in front in the photo is the lift-and-slide unit that will let out onto our rooftop patio, and bring in all of that gorgeous sunlight at the top of the house!

The windows are u-PVC with aluminum exterior cladding. We went with Gaulhofer for two reasons: one, the windows are beautiful, robust, extremely well built, and very high performance, and two, because of the exceptional service and attention we have received from Adrian at Herrmann's Timber-Frame Homes. I would highly recommend them to anyone without reservation. Although these are not the most affordable windows, I believe that windows are one element in particular that should not be nickel-and-dimed when building a home. Windows are the weak point in nearly any wall assembly, and are also unique in being one of the only elements of the building envelope that we will touch and interact with regularly as occupants. The feeling of quality to hand when opening and closing the windows will be a signature example of the level of quality I believe all elements of a home should aspire to. Couple this with thermal performance suitable for Passive House applications and you have a wonderful thing. The choice to put Gaulhofer windows in to our home was one of the easier choices we've had to make so far.

A quick progress update: we are expecting the structural engineer's review Monday or Tuesday, which means our permit process can get rolling again...

Trees and doors (and a whole lot more)

The jungle

We have yet to break ground and shrubbery is quickly taking over. Our windows and doors are already on the shipping container, headed over from Euro-ville. When we ordered them, we thought we’d be waiting for them to arrive and not the other way around. Cut us a break would ya??!! It’s our first time building a house…

My grandmother would always tell us kids, as we impatiently asked about dinner, “good things come to those who wait”. Argh. It killed me then and it’s killing me now. I keep channelling Granny as things keep getting delayed. It will be worth it. 

I’m beginning to realize that there is a direct correlation between my blog writing and my emotional and mental state. When I’m excited, and progress is being made, there’s an influx of posts. When the opposite is true, things remain somewhat stagnant. It is my full intent to write as frequently as possible, reporting on all house happenings, and not just when I ‘feel’ like it. There’s just not a whole lot to report yet.

Last week, Mark prepped more drawings (electrical and plumbing) and distributed them to multiple trades for estimates. He accidentally wrote 145 Bayswater on the plans (instead of 105) and has caused some confusion. Our neighbours at 145 have just started building a house on an adjacent empty lot as well. Imagine the surprise of the excavator trade showing up at 145 to see there was already a hole in the ground. Our neighbour texted me to say someone was there scratching his head about the drawings the architect sent him. Du-oh! 

I have been consulting with several tree service teams so we can get the lot cleared and ready to build on. It’s always more complicated than at first thought. There are some trees at the front (closer to the sidewalk) that we have to get permission from the city to cut. And there are some growing over the electrical lines on the alley that we have to get Ottawa Hydro to cut. Then we bring the tree team in. 

Our wonderful orange house neighbours have gone ahead and started some of the clear cutting for us. The large apple tree is down! They want to burn some of the wood in their fireplace. I have requested that they leave some of the larger diameter portions as I would like to mill it and turn it in to something for the house. What that something is, remains to be seen. A powder room counter top? A stair landing in the dining room? TBD. It’s beautiful old-growth apple tree and was in the centre of our lot for 100+ years. It’s a part of the land and needs to be a part of the house.

El stump'o

Good news on the silver maple front: it’s healthy! There is a bit of a concern that we’ll do some damage to the root system when we excavate. The house is far enough back, though, that any damage will be kept to a minimum (we hope!). We’ll probably just do some deep root fertilization to help it get through the year, and look at cosmetic trimming in the future. The canopy is good as-is. No need to unnecessarily add stress to the tree at this stage.

What else? We are meeting someone from Ottawa Hydro at the lot tomorrow morning to discuss how we will connect to the main line. And we are making some big decisions on the backend that we hope to share soon enough. Oh, and did I mention we ordered blue doors? Reflex blue. The bluest of the blues. Couldn’t expect us to go entirely neutral with neighbours as colourful as ours, could you?

That's blue baby! 

Pre-fab no more

We’ve thrown the towel in with our pre-fab builder. The red flags have been flying for a while now. We’ve finally decided that we would feel more comfortable building the good old fashioned way — with site framing. 

Despite this setback, we're feeling much more comfortable with where the build is headed. With tried and tested techniques and builders. We’ve got several enthusiastic and experienced builders anxious to join our team. Mark has had to redesign our wall panels so that they can now be built on site (rather than the factory), using updated modern framing methods. His new wall system is pretty exciting. One in which he might actually like even more than before! He will write a post about it, because it’s worth writing about. Something new that can open up the doors for blah blah blah… (I say blah, but it’s very fascinating. Blah is because I’m not sure how to explain it.)

Now the ball is back in our court. We’ve got structural engineer looking at the new wall system. He should be giving us his feedback and stamp this week so we can finally get the city all of the drawings it needs to issue our permit. Quelle relief that will be.

This is what comfort looks like

Mark has been doing ‘thermal bridge calculations’ on our house. With Passivhaus, the goal is to make the building as air-tight and insulated as possible. Weaknesses often lie in the details —where differing materials connect or gaps occur. Obviously we don’t want any weaknesses. We want a fortress of thermal resistance, which is exactly what Mark’s models are showing.

The image above is a thermal bridge calculation on where our walls meet the slab. By all accounts, it looks excellent. Uniform heat distribution throughout. The inside sits at a comfortable 20•C and the outside at 0•C. If we had any gaps or weaknesses you’d see the warmer colours leaching their way out to the exterior. Instead, we have magical, rainbow coloured walls :)