A construction mortgage is a short-term loan used for various property development purposes. Whether you are planning to build your own home, developing your property for commercial or industrial purposes, or getting ready to sell, a construction loan can give you the funding needed to get your project started. Lenders and financing options vary based on the stage of land development. In some cases, you have to go with private lenders or even look into equity financing (investors) rather than debt financing. At Mass Mortgage Group, we can help with both.
Unlike other mortgages, construction loans are disbursed in stages as construction progresses. These payments are often referred to as draws and are released after each phase is completed and inspected. Traditional lenders typically allow four draws, while alternative financing offers more flexibility. If you do not own the land, you can use the first draw to purchase the land. The borrower must clear the amount in full or convert it into a conventional mortgage upon completion. You only pay interest on the amount released and not on the entire sum.
Benefits of construction loans
-
Construction loans are disbursed in stages, which offers the advantage of paying interest only for the funds that have been released instead of the entire loan amount.
-
Payments made during disbursement stages help minimize costs during construction.
-
A construction loan can cover expenses such as land purchase, labor, materials, and permits/inspections, resulting in an efficient and well-planned financing solution for your building project.
-
A construction loan provides the financial capability to bring your vision to life, from building a dream home to adding an extra room or covering renovations.
Obtaining a construction mortgage is more complicated than traditional loans because they involve a higher risk to the lender. The lender will conduct comprehensive evaluations of the project at every construction phase to ensure that funds are only released for completed work and that sufficient funds remain to complete the project.
As experienced mortgage specialists, we understand the complexities of construction financing and can help you secure the funding you need to complete your project. We know the requirements and challenges of obtaining a construction loan, including creating detailed construction plans, accurate budget estimates, and evaluating your financial situation. We also work with a team of land experts who offer valuable guidance throughout the land acquisition process.
Our Mortgage Broker Services include: Residential Mortgages for Employees | First & Second Private Mortgage | Construction Loans/Financing | Commercial Real Estate Loans | Self-Employed Mortgage | Home Equity Loans | Business Loan | Residential Mortgages | Mortgage for Professionals | Land Financing | Construction Loan
Mortgage Brokers/ Agents at MassMortgageGroup.com offers Commercial Solutions to clients across Thornhill, Vaughan, Scarborough, North York, Toronto, Newmarket, Richmond Hill, Aurora, and Markham, Ontario.
Contact info@MassMortgageGroup.com - Mortgage Agents serving across Ontario