A Toronto construction take out is used to pay out the construction costs associated with a project and term the repayment over a long term time frame.
A typical construction take out loan would payout a construction loan and any other mortgages in place on the subject property to allow a new mortgage to be registered that consolidates all previous charges.
So in many ways, a take out mortgage is also a consolidation mortgage of sorts in that its being used to consolidate existing mortgages registered against the property.
Taking this one step further, a take out loan can also be used to consolidate other debts related to the project or even unrelated debts.
Many times with self builds or owner build construction projects, lines of credit and credit cards can be utilized to help fund the construction costs, or deal with any overruns or unqualified costs that can’t be paid by the construction loan. Therefore, when applying for a construction take out mortgage, its important to list out all the debts you would like to consolidate into the new long term mortgage so that you’re getting the maximum benefit from the take out mortgage process.
As long as you qualify for the amount of the new mortgage being requested, you could also potentially consolidate other non related debts as well.
The key here is to try and qualify for the amount of debt that you would like to get refinanced into a new mortgage and then you will still have some time to decide what needs to be paid out and what can be left outstanding.
The last thing you want to do is go through the whole take out process only to determine months later that you’re not going to be able to work down your outstanding balances on your lines of credit and credit cards as fast as you thought you would be able to and have to go through a second debt consolidation process which will further add to your out of pocket costs.
If you have a construction project that will require a Toronto construction take out mortgage, I recommend that you give me a call so we can discuss your situation in detail and come up with the most relevant construction mortgage refinancing options for your consideration.