When many people think of mortgages, they think of buying a resale home with a down payment, then making monthly payments once moved in.
When it comes to building a brand-new home from scratch, you might assume it works the same way.
However, it takes time for a new home to be built. And if you wish to use the money you get from selling your current home to purchase your new home, this becomes a problem, as you'll likely still be living in your old one while the new one is under construction.
The option, then, is to take out a mortgage to pay for the construction of your new home. There are two types of construction mortgages: completion mortgages and draw mortgages.