“Building Construction Loans For Residential and Commercial Projects Have Many Similar Requirements”
It stands to reason that most construction loans for building erection and material costs would be for residential homes in terms of sheer numbers. Commercial projects are also significant in terms of overall dollars financed every year in the province of Ontario, but of course consist of fewer total projects.
And while the average commercial project can be significantly larger in size and complexity, they can still share many of the same requirements asked by lenders for residential home builds.
So before applying for a construction loan for building, here is a list of the basic information list that any lender is going to want to see before assessing your request for construction financing.
- Mortgage Application: A standardized application form will need to be filled out identifying the individual or company seeking the construction loan. If the applicant is a business, the major shareholders will need to be listed along with their ownership percentages.Lenders may or may not require a personal net worth statement for an individual borrower(s) or for the major shareholders of the business that’s applying. In most cases, personal net worth statements are required so its good to have them prepared a head of time to make sure they are as accurate as possible.The application lets the construction mortgage lender identify who they are dealing with and conduct any background checks they may require before approving financing for any requests.
- Drawings and Plans: Completed and approved drawings and plans for the project that clearly show what’s being built and how it will look will need to be reviewed by the lender prior to funding. If anything is in an uncompleted or unapproved state, you may be able to get your application assessed, but no financing will be authorized until the required documents have been submitted for final review.
- Itemized Budget: The more detailed the projected budget is for the project the better, including supporting documentation for different price quotes that have been accepted by suppliers and their related terms and conditions, especially for the major items.
- Construction Time Line: The building time line is very important to make sure your project plan will be able to conform to any draw schedule a lender may propose. It also reduces the chance of any misunderstandings in terms of what the lender will advance funds for at any given stage of the project.
- Overall Construction Plan: The lender will want to know if you’re using a turn key builder, a general contractor, or self managing sub trades yourself. For certain projects, institutional lenders will have certain builder requirements that will have to be met to qualify for their programs. Information on as start times, completion dates, and take out mortgages, if applicable, would also be included.
While this is not going to be a comprehensive lender requirements list for each individual project, all the items above will typically be required for any type of residential or commercial project.
If you’re trying to locate and secure construction loans for your project, I suggest you give me a call so I can quickly assess your requirements and review the most relevant options with you.
Click Here To Speak With Construction Mortgage Broker Joe Walsh.