Construction Financing For Custom Home Building
- Construction Financing is advanced in draws;
- Rates begin at 8% Interest Only 1st mortgage
- Rates begin at 10% Interest Only 2nd mortgage
- Broker and Lender fees are usually around 4% of the loan amount.
- Present Value (PV) and Future Value (FV) are important benchmarks we use to determine your construction draws;
- You must have equity in the land and at least 25% equity in the Present Value (PV) at all times. Including after you demolish any house currently on the property;
- The loan is interest accrual, no monthly payments;
- The loan is typically advanced in 4 draws;
- I calculate the draws based on your equity and budget;
- If you hired a General Contractor (GC) then they must be approved by the lender;
- If the house is a new build and you plan to sell, it must be under warranty with Tarion.
- You need Builder All Risk insurance for the project;
- Your GC must provide proof of liability insurance;
- Your personal and property taxes must be paid up to date;
- Draws are advanced when work is in place, completed satisfactory and passed inspection.
- I only deal with one Lender at a time. Until the Lender says “no”, I won’t move on. Its bad business to shop your deal all over town.
- If you don’t have enough cash to begin the project then we can advance on a cost to complete basis direct to trades.
On the average it takes a couple weeks to get financed if it’s a fairly straightforward
