construction bridge finance | Ontario Construction Loans And Mortgage Financing

Construction Financing Bridges Required

Joe Walsh — Tue, 04 May 2010 22:06:28 +0000

“Construction Financing Bridge Loans Can Be A Savior To Getting Your Project Completed”

The most common construction financing bridge loan requirement is for the property fix and flippers that are trying to improve an older home in poor condition and flip it for profit in a short period of time.

You have seen some of the horror stories on the reality tv shows where people are desperately trying to renovate an older home and everything keeps going wrong the further they get into the project. While these may seem like unusual or extra ordinary cases, they are more common then you might think.

The typical story goes something like this. Property is purchased for a bargain price. A renovation plan and budget are put together and used to secure construction mortgage financing. The project doesn’t go according to plan for whatever reason, including the renovator changing their strategy on the fly. The project runs over budget and the owners run out of money before the work can be finished and the property re-marketed for sale.

When the construction mortgage funds run out, the owners will leverage credit cards, lines of credit,and anything else they can get their hands on to finish the project, which still might not be enough, and even if it is, they can end up destroying their credit in the process if it takes a while to sell the property and pay down the outstanding debt.

One way to help stop the bleeding or at least allow the project to get completed in a more orderly and lower stress fashion is to secure a construction bridge loan.

Construction bridge financing is based on the work completed to date and the lenders assessment of the remaining work. In most cases, these loans are under $100,000 and are typically provided by a private lender who is prepared to re-market the property themselves if required.

But in most cases, privates will do these deals because they see the quality of work done to date (which in many cases is the underlying problem in that the work is too good or too extensive compared to what is actually called for) and feel comfortable with the local real estate market.

The trick is to find this type of construction bridge financing as its not commonly provided by most private lenders. And while the cost of bridge financing is not going to be cheap either, it pales in comparison to credit card rates or the loss of profits from lender foreclosure if you can’t find enough money to complete the project.

If you’re trying to locate and secure a construction bridge loan for a residential or commercial property, give me a call and I’ll quickly determine what options may be available to you.

Click Here To Speak With Mortgage Broker Joe Walsh

The post Construction Financing Bridges Required first appeared on Ontario Construction Loans And Mortgage Financing.

Construction Bridge Loans Are All About Speed

Joe Walsh — Mon, 12 Apr 2010 16:51:40 +0000

“The Ability To Get a Construction Bridge Loan Quickly Can Keep Your Cash Flow on Track and Delays Out of Your Project Time Line”

The classic example of someone needing a construction bridge loan is where the project has incurred additional costs for whatever reason and does not have the ability to complete the work to allow the building to be sold or refinanced into a long term take out mortgage.

Without a quick inflow of cash into the project, delays are likely going to occur that will see the sub trades disappear to other jobs and creditors demanding payment for work already completed.

This is a more common problem with an institutional construction loan in that rarely is the hold back ever paid out at the end of a project. With private mortgages, even if the project has over run to some degree or budgeted too tightly, the hold back portion will be issued 45 days after completion which will provide cash to pay off outstanding debts.

But even with private construction loans, if the project has not even gotten to a completed state, the additional funds that may become available at the end of the project will not be forthcoming unless some incremental capital is injected into the project.

The solution in many cases is to simply secure a construction bridge loan against the property as an additional mortgage. Typically, the smaller the amount of funds requested, the easier it will be to get a bridge loan in place.

Bridge loans are provided by private lenders who can quickly assess the current level of completion of the project and the amount of construction building risk that remains. If there is sufficient equity remaining in the overall project, a higher loan to value than the construction loan can be secured due to the fact that the majority of the work has been signed off already.

Because time is of the essence, these types of mortgages can be put into place in just a few business days in many cases, especially with projects that have all the documentation up to date including post building appraisal and interim draw assessment reports.

Private lenders are going to charge a lender fee for extending the construction bridge loan, but because of the short period of time it will be outstanding, the majority of the lender fee will represent the private’s return as interest will only be earned for a month or so in most cases.

If you have a project that requires a construction bridge loan, please give me a call so I can assess your situation right away and provide construction financing options that we can get into place quickly.

Click Here To Speak With Construction Mortgage Broker Joe Walsh

The post Construction Bridge Loans Are All About Speed first appeared on Ontario Construction Loans And Mortgage Financing.