As we head into the main construction season, this is going to be a very common call I get from people who do not have enough funds available to complete the project they are currently in the middle of.

There could be a number of reasons for not having the money to complete the work.

• Changes in Scope (like a decision to make the kitchen bigger) over ran the budget.
• Some unexpected expenses were incurred from unforeseen events (like excessive rain delayed the closing in of the structure)
• The bank refuses to advance any more draws against the construction loan already in place (like the third party estimator claims that remaining work costs more than the funds available even if you don’t agree or can prove otherwise)

We could probably add considerably to the list, but it doesn’t really matter.

Your short and you need more money.

Usually when a project gets to this point, there is no time to waste as their are contracts to honor and sub trades to keep engaged to complete the work.

The good news is that there is typically a way to solve the problem through what we call a construction bridge loan.

Your ability to acquire a construction financing bridge loan is going to be relative to the amount of work completed and the amount in value the property has increased.

For instance, if 80% or more of the work is completed, you can typically get 75% to 80% of the completed fair value of the property.

If completion is lower, the amount of money than can  be arranged as a percentage of the property value will be less.

The source for construction bridge loans are basically private mortgage lenders that advance construction loans and have the ability and experience to quickly assess the work completed in order to make a lending decision, hopefully in your favor.

And because this is coming from private lending sources that are used to this type of request, the turnaround time can be as quick as two to five business days.

Of course you understand that fast, short term funding is going to come at a higher cost that a bank loan or mortgage, it still likely going to be cheaper than the costs you’re trying to avoid if your project stalls out.

The construction bridge mortgage would be registered behind the mortgages in place and would be paid out either from the proceeds from resale of the finished project, or through funds provided by the take out mortgage if the property owner is planning to self occupy.

If you’re in the middle of a residential or commercial construction project that requires additional capital in a hurry to get finished, I suggest that you give me a call so we can quickly assess your situation and provide relevant construction bridge financing options for your consideration.

Click Here To Speak Directly To Construction Mortgage Broker Joe Walsh

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

“Toronto Construction Bridge Financing or Bridge Loans Can Be Placed In A Matter Of Days”

A Toronto construction bridge loan is typically required at or near the end of a construction project to provide the cash flow necessary to complete all the work and/or sell off completed units.

There can be many reasons for a construction bridge loan including cost overruns during the project, changes in scope that added to the overall project costs, delays in draw advances or draw cut backs by the construction mortgage provider all ready in place, and so on. Regardless of the reason why funds are required, the situation typically calls for immediate access to the additional capital required so that the project doesn’t slow down or stall out completely, creating even more costs or worse for the owner or builder.

Because the construction bridge financing is sought near the end of the project, the work done to date has increase the property value and most of the construction risk has been eliminated, providing a fairly straight forward picture for a private mortgage lender to finance against. Like all construction loans, a construction bridge loan is secured by a mortgage registered against the property behind whatever current mortgages are in place. From the time of application to funding, a construction bridge financing mortgage can be put into place in two to five business days which is about as fast as mortgage related financing gets.

The key to getting a Toronto construction bridge loan in place quickly is to work with a construction mortgage broker who has direct private lending sources that are prepared to provide these types of loans on very short notice. In addition, the mortgage broker will need to have a good working relationship with a real estate lawyer who is ready and willing to turn the documentation around quickly. Without the team of construction mortgage broker, lawyer, and private mortgage lender working closely together, its highly unlikely that anything will happen right away which can put even more pressure on your project. In many cases, the bridge financing amount requested is less than $100,000, which allows the private lender to make a very quick decision without having to get into an excessive level of detail during the application and assessment process.

If you require a Toronto construction bridge loan, I recommend that you give me a call so I can quickly assess you requirements and provide relevant construction bridge financing options for your immediate consideration.

Click Here To Speak With Toronto Construction Mortgage Broker Joe Walsh

The post Toronto Construction Bridge Financing first appeared on Ontario Construction Loans And Mortgage Financing.

“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.

“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.