“Here’s How To Go About Getting The Builder Loan You Require For a Construction Project”

Part of being successful as a builder is to have the ability to acquire construction financing funds on a timely basis for the projects you’re working on that require builder loan financing.

The challenge many builders have is that they leave the process of applying for construction financing too long and end up scrambling to get capital in place for the start of construction or at least for the timing of the first draw.

The recipe for securing a builder loan has three basic components.

First, the down payment and/or equity investment from the real estate where the construction is going to take place is easily established by way of third party documentation such as an appraisal in the case of land value.

Second, all the construction requirements have been met for the regulatory bodies preside over the project. That means any zoning changes have been passed, building permits are secured, and drawings and budgets have been finalized.

Third, and perhaps most important, the builder has a solid exit strategy to repay the builder loan at the end of the project. Primarily, this involves a presale agreement with a customer where a binding document has been signed and a deposit provided. Building houses into inventory will be more difficult to secure financing for because of the unknown exit strategy and related timing.

If you’re in a hurry to get a project going, you’re also going to want to get more focused on private mortgage construction lenders as any institutional construction financing program is not likely going to be approved in a short period of time. Private mortgages will cost more, but they are also faster to get into place and manage.

The best first step in putting everything together in order to get construction financing with the best available results is to select a construction mortgage broker that has experience with your type of construction project in the area where the construction will take place.

This can be a key ingredient to success with the application process and one that gets over looked by more than a few professional builders.

If you’re looking to secure a builder loan for a project you’re planning or one that you’re in the middle of, I suggest that you give me a call so I can quickly assess your requirements and provide relevant construction financing options we can go through together.

Click Here To Speak With Construction Mortgage Broker Joe Walsh

The post Recipe For Securing a Builder Loan first appeared on Ontario Construction Loans And Mortgage Financing.

“Here’s a Basic Outline of What a Construction Lender Will Want To See in a Multi Unit Builder Construction Loan Application”

When seeking construction financing for a development project, speed to money and the terms you’re looking for is going to start with providing as complete an information package as possible that is going to be relevant to the lenders you are applying to.

Incomplete applications will at best slow the process down and at worst get the application rejected as many lenders don’t have the time and patience to continually ask for the missing information that they require to make a decision in your favor.

While no two lenders are exactly the same in terms of what they want to see and how core information needs to be supported, here is a basic list of the information 80/20 you can expect to have to come up with in order to get anywhere with your construction financing request.

• Building plans including floor plans and elevations, artist renderings.

• Construction Budget which must include land acquisition and all hard and soft costs.

– Physical construction costs.
– Fees and permits (sewer, water hook up, lot levies, building permits etc.)
– Architect, legal and appraisal fees.
– Interest and brokerage fees.
– Sales and leasing commissions.
– Contingency & GST.
– Site supervision and overhead.

• Construction contracts and terms.

• Flow chart for time line and cash flow statement during construction.

• Proforma income and expense statement detailing anticipated project activity and sales.

• Phase I Environmental reports and project feasibility studies and absorption analysis if available.

• Recent appraisal if available and site purchase agreements of sale.

• Proforma profit projection.

• Borrower Information:

– Personal financial statement listing all assets and liabilities.
– Last 3 years business statements showing balance sheet and income and expenses if available.
– Credit report if available.
– Borrower history detailing experience.
– Confirmation of Borrowers equity.

Remember that the more complete the information package, the faster you’re going to get some serious traction with construction loan providers.

Also keep in mind that poorly assembled or thrown together application can speak (at least in a lender’s mind) as to the way you go about your business. While a well prepared application is not going to guarantee that you’re going to get financing from any particular lender, it helps get your project looked at considered versus easily dismissed due to poor presentation.

Click Here To Speak With Construction Mortgage Broker Joe Walsh.

The post Anatomy of a Builder Construction Loan Application first appeared on Ontario Construction Loans And Mortgage Financing.