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Construction Mortgages

Embark on your dream home construction project with our tailored construction loan solutions, designed to provide the necessary financing and support to bring your vision to life, from groundbreaking to completion.

Image by Daniel McCullough

The Fundamentals to a Construction Loan

What & When: A construction loan is a type of loan that helps you pay for building a new home or fixing up an existing one. If you want to make smart choices about how to finance your project, it's important to know how construction home loans work. This knowledge will help you plan better and make the best decisions about your money.

Purpose: Construction loans are meant to provide funds for construction projects, including building a new home, adding an extension, or carrying out significant renovations.

Loan Structure: Construction loans are usually structured differently from traditional mortgages. Instead of receiving the entire loan amount upfront, funds are typically disbursed in installments or "draws" as the construction progresses.

Approval Process: To obtain a construction loan, you'll typically need to submit detailed plans, cost estimates, and other relevant documentation about your construction project. Lenders will evaluate your creditworthiness, project viability, and your ability to repay the loan.

Disbursement Process: As the construction progresses, the lender will conduct inspections to ensure that the work is proceeding as planned. After each inspection, the lender will release the funds for that particular phase or draw of the construction project.
 
Interest Rates and Terms: Construction loan interest rates are usually higher than those for traditional mortgages. The terms of the loan, including the interest rate, repayment period, and any fees, will vary depending on the lender and your specific circumstances.
 
Transition to Mortgage: Once the construction is complete, you'll typically need to transition the construction loan into a traditional mortgage or another long-term financing option. This process is often referred to as the "end loan" or "permanent financing."
 
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