A building mortgage in Toronto can be arranged for anything from a single family dwelling construction project to a commercial or industrial facility build. Construction financing is provided through our institutional and private mortgage lending sources that service the Toronto and surrounding area.
For residential building mortgage financing, the bank related options are lower cost, but also require a pre approved take out mortgage to be in place with the same lender prior to construction as this is the only way a bank or institutional lender will provide a builder loan for a single family unit. This is one of the reasons private mortgage construction loans are more common even if they are priced at a higher cost of borrowing. Private lenders are only interested in the building mortgage or construction loan and most of the time they will not even require that the long term take out mortgage be in place prior to the commencement of construction.
Toronto building mortgages for resale unit building will be dependent to a large extent on the pre sold units for the project. The higher the number of pre sales in place with solid contracts signed and deposits in hand, the stronger the construction financing deal the builder, developer, or property owner will be able to arrange. Certain private lenders will focus on these types of projects due to their knowledge of the market and their ability to step in and take over the project if it stalls or falls apart before completion, reducing their potential risk of loss in the process.
For commercial building mortgages, the dollar amounts are typically larger than the average residential home, so there will be a greater emphasis on the construction planning and budgeting process by the mortgage lender. Larger projects will likely have more draws and more draw administration to deal with as well. In general terms, draw management is much more cumbersome with an institutional lender than with a private lender as well.
Most building mortgages are in first or second position on the property where the building is taking place. Loan to value ratios can range from 60% to 80% on the high side depending on the strength of the individual project.
If you need a Toronto building mortgage, I recommend that you give me a call so I can assess your project needs and provide relevant construction financing options for your consideration.