A Toronto Building loan is almost always provided in the form of a real estate property mortgage registered against the property where the construction is taking place.
Building loans are provided by both bank or institutional lenders, and private mortgage lenders. In fact, the majority of building loans are from private mortgage lenders due to the speed in which they can be put into place and the more straight forward construction mortgage administration process they provide.
That being said, a Toronto building loan from a bank or institutional lender will always be the lowest cost of construction financing available. So if you have a strong enough financing profile to qualify for bank building loans and have the time to go through their administration process, this is an excellent source of low cost construction mortgages to access.
For single family residential building loans where the intent of the borrower is to occupy the property after construction is complete, banks will require that you qualify for the building loan and the take out mortgage at the outset of the construction. The key reason why is that banks and other institutional lenders will not otherwise finance building loans for this purpose unless they can secure the long term residential mortgage in the process.
Commercial building loans are a different story as conventional lenders will look at financing larger one off commercial projects where there is no back end mortgage financing opportunity due to size of the mortgage funds required.
When you’re in the market for a Toronto building loan, its important to know what you can qualify for and what type of construction loan program and lender is going to be the best fit for you. Focusing on the wrong sources can be a big waste of time and can also end up with you working with a building loan provider that is a very poor match for your project which will likely lead to problems before construction is complete.
If you’re a builder, developer, or property owner seeking a Toronto building loan, I suggest that you give me a call so I can quickly assess your requirements and construction project and then provide relevant building loan options for your consideration.