Construction financing is a type of company funding designed to help contractors, sub-contractors and those working in the construction industry. It can be utilized to finance new projects, pay suppliers speedily, buy new construction equipment and machinery and boost working capital. There are different types of construction finance available, including secured and unsecured loans and equipment leasing. Since there is more lender risk, construction mortgages usually have stricter qualifications and higher interest rates.
The cost of construction loans relies mainly on the size of your firm, the nature of your trade, and a few other aspects like your credit score and creditworthiness. Some lenders are designed to satisfy larger firms, while others support smaller businesses.
Construction finance also puts you in a better position to take on larger jobs without stressing about getting paid for outstanding accounts receivable.
With TopRankin Mortgages Inc, we can assist you in making your construction dream come true. Here, you will work closely with a reliable team of highly experienced employees who maintain high ethics, integrity, and transparency standards. Find out how simple it is, and apply for construction finance today. And of course, if you have any queries, feel free to reach one of our representatives at any time – we’ll be glad to help walk you through the process!
A Construction Mortgage, also known as a self-build mortgage, provides financing for the construction of a new home or a major renovation project. Unlike a traditional mortgage, the funds are released in stages as construction progresses.
Construction Mortgages work by releasing funds in stages, commonly known as “draws,” as the construction progresses. This typically occurs at four stages: land purchase, roofing and framing, lock-up, and completion. An appraiser will confirm the completion of each stage before the next draw is released.
To qualify for a Construction Mortgage, lenders often require a detailed construction plan, including budget and timeline, a solid credit history, proof of sufficient income to cover the loan, and sometimes a higher down payment than traditional mortgages.
Typically, in Ottawa, the minimum down payment required for a Construction Mortgage is 20% of the total cost, but it can vary depending on the lender and the total price of the construction project.
Yes, if you already own the land on which you plan to build, its value can often be used as part or all of your down payment. The land value will need to be assessed to determine its worth.
Yes, but it can be more challenging as many lenders see self-builds as a higher risk. Therefore, requirements are often more stringent, including having a larger down payment and more comprehensive plans and estimates.
Yes, typically, once the construction is completed and the home is ready to live in, you can convert the Construction Mortgage into a conventional mortgage. This process is known as the “end loan” or “take-out loan”.
The approval process for a Construction Mortgage involves a review of your creditworthiness, your construction plans, and cost estimates. An appraiser may also assess the expected market value of the finished home. If approved, the loan will be disbursed in stages as construction progresses.