Two less common but useful structures: a construction (or draw) mortgage releases funds in stages as a build or major renovation progresses, rather than all at once; and a blanket (or inter-alia) mortgage secures one loan across two or more properties. Both are arranged through private and specialist lenders, and both suit specific situations where a standard single-advance mortgage doesn’t fit.
Construction / draw mortgages
A construction mortgage funds a build or substantial renovation in stages — called draws — released as the work reaches agreed milestones and is verified, usually by inspection. You’re not paying interest on the full amount from day one; the balance grows as the project does.
- Suits: new builds, major renovations, additions — where costs land over months, not on one date.
- How it works: funds released against completed stages, verified before each draw.
- Private construction lending can be more flexible on the draw schedule and the borrower’s profile than a bank, and can move faster — useful when a bank’s construction program won’t fit the project or the timeline.
- Watch for: holdbacks, inspection requirements, and cost overruns — build a contingency rather than borrowing to the limit.
Blanket / inter-alia mortgages
A blanket mortgage secures a single loan across more than one property. It’s often used when a homeowner is buying before selling and wants to draw on the equity in the existing (unlisted) home to complete the new purchase — the one mortgage sits across both.
- Suits: buying before selling; investors leveraging equity across a small portfolio; situations where one property alone doesn’t provide enough security.
- How it works: the lender registers against two (or more) properties, giving them combined security and giving you access to combined equity.
- Exit: typically the sale of one property releases it from the blanket and repays part or all of the loan — so, as always, the exit is the crux.
- Watch for: both properties are on the line, and releasing one from the charge has its own process and cost.
Why these go through a broker
Neither product is available off the shelf, and the right lender depends heavily on the specifics — the project, the properties, the timeline. Through access across B lenders, MICs and private lenders, the structure can be matched to the situation, and urgent files — a build that needs to start, a purchase that needs to close — can often be arranged quickly.
Costs and risks
- Both carry higher rates and fees than standard first-position lending.
- Construction files add inspection and draw-administration costs; blanket files add a release process.
- With a blanket mortgage, more than one property is secured — the stakes are higher.
- Terms are usually short; renewal is not guaranteed.
- Final approval depends on the complete application and lender review.
Frequently asked questions
Can I use equity in my current home to buy before I sell?
Yes — this is a common use of a blanket mortgage or a bridge. A blanket mortgage secures across both homes; a bridge is a short-term second on the current one. Which fits depends on your timing and the numbers. Both are arranged through a broker.
How do construction draws work?
Funds are released in stages as the build reaches agreed milestones, usually verified by inspection before each draw. You draw — and pay interest — as the project progresses, rather than on the full amount upfront.
Are these hard to arrange?
They’re specialist structures, so they need the right lender rather than a generic one. That’s precisely what a broker with broad lender access is for — matching an unusual need to a lender who does that kind of deal.
Whenever you’re ready — at your pace
Construction and blanket files are specialist. If you have a build to fund or you’re buying before selling, I’ll tell you honestly which structure fits — and which lenders actually do it.
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This page is general education about mortgage options in Ontario. It is not legal, accounting, tax or insolvency advice, and it is not an offer of credit. Please seek independent professional advice for your own situation.