Property Development Financing

“Key Considerations For Toronto Property Development Financing”

Toronto property development financing may be required for a construction project where the existing  land needs to be prepared in some fashion to allow the building construction to commence.

As a general rule, all phases of a construction project can be financed, provided that 1) there is sufficient equity in the project to support the loan, and 2) that the expected market value of the property is going to increase at the conclusion of each phase of work.

In this sense, Toronto property development financing is no different. Builders and developers have to make sure that they maintain a certain amount of equity in the project to attract the capital they require at any given point of time. And equity really only comes from two places…its either invested in the project by the owners or created within the project through work that is completed that has a market value.

For many developers, a property development loan can be a good source of financing to move the project along to the next step where more investors are going to be coming in, providing a further equity stimulus to attract a construction loan for the building phase.

For other property owners, developers, and builders, Toronto property development financing will be the last construction mortgage loan they will require for all or part of the project. Especially with larger projects, its not uncommon for a developer to sell off part of the development, after site infrastructure has been installed, to other builders or developers. This provides the injection of capital to the project to fund the next phase of construction.

Toronto property development financing will come in a mortgage registered in either a first or second position. If the land being developed is free and clear of encumbrances, the equity may be sufficient to secure a construction mortgage for the amount of the development costs. Once again, the higher the marketability of the land and the proposed land after development is completed, the higher the loan to market value ratio will be when trying to secure a property development mortgage.

For assistance locating and securing Toronto property development financing, I suggest that you give me a call so we can go through your requirements and discuss relevant property development mortgage options that are likely going to be available to you.

Click Here To Speak To Toronto Construction Mortgage Broker Joe Walsh