Annapolis Valley build: lot equity as the down payment

Illustrative example

The situation

Location

rural Kings County, Annapolis Valley

Borrower

A couple in their fifties who own a two-acre lot outright and hold a fixed-price contract with a Valley builder

Income

$134,000 household, one salaried, one pensioned

Credit

Both mid-700s; no other debt

Purchase price

$530,000

Down payment

$110,000

Mortgage

$420,000

Payment at 4.45%

$2,313 a month

The challenge

The owners had paid off a two-acre lot outside Berwick and had a fixed-price contract from a local builder. They had little cash beyond a contingency, and the bank branch had asked for a down payment on the build cost as though the land did not exist. The builder wanted to pour the foundation before the ground froze.

What the lender looked at

• The lender appraised the lot and the plans together: $530,000 on completion, lending $420,000, a 79% loan-to-value, so the file stayed uninsured.
• A signed fixed-price contract with a stage schedule matching the lender’s four draws, the building permit, the plans, and the builder’s references and insurance.
• Your money goes in first: with the lot as the equity, the first draw reimbursed the foundation after it was in, so the builder’s contract had to carry that stage.
• Qualifying at 6.45% on the full $420,000 as a 25-year mortgage, $2,801 a month and 30% gross debt service, even though only interest is paid during the build.
• Course-of-construction insurance from the first draw, and on completion a well potability test and the septic installer’s certificate before the final advance.

What was done

The build was set up as a four-draw progress mortgage: Land / start $63,000, Lock-up $168,000, Mechanical and drywall $273,000, Completion $420,000, cumulative. Interest only on the amount advanced, monthly, at the example rate. At completion the lender released the final draw less the $42,000 holdback, which followed once the lawyer’s lien search came back clear after the statutory period, and the loan converted to a 25-year mortgage.

The outcome

Illustrative outcome: about $8,177 of interest across the 10-month build at 4.45% (chartered-bank prime rate, Bank of Canada, 2026-09-16), no cash down payment and no deed transfer tax, since the $1,650 at Kings County’s 1.5% was paid when the lot was bought. On conversion, $420,000 over 25 years at the same rate is about $2,313 a month.