Owner builder construction financing is a very common type of construction mortgage that we provide to our customers.

In most cases, the customer already has the property secured as it can be difficult to try and arrange both property acquisition and construction financing into one financing facility due to the amount of time it takes to get everything completed.

That being said, bank or institutional construction loans for owner builders typically require the property to be free and clear of encumbrances so that a first mortgage position can be secured against the real estate, so a single mortgage to acquire the property and then construction the new building is not going to likely work anyway if you are considering working with a bank or institutional lender.

The real key to owner builder construction financing is making sure that you are focusing in on the lender source so that the needs of your project can be properly met.

In many cases, owner builder loans are provided by private mortgage lenders even though the cost of financing is going to be higher than a bank.

This is primarily due to the speed in getting a construction loan in place through a private lender and the predictability of the draw advance schedule which is going to be critical to making your cash flow work through out the project.

Yes, private money will cost more, but this is also a short term cost that will only last during the time of construction and typically will not have a material impact on your overall budget.

Lower cost owner builder construction mortgages will take longer to get into place, and you’re well advised to access to a cash or credit reserve if the draw advances are delayed or reduced for any reason during construction.

There can certainly be cost advantages to bank or institutional loans for owner build or self build construction, provided that you approach this type of financing in the proper manner and clearly understand how to manage it for best results during the entire time the funding is required.

The best way to determine which type and specific source of owner builder construction financing is best for the project you’re planning, or perhaps one that you are in the middle of, is to work directly with an experienced construction mortgage broker who not only has broad access to different types of construction financing sources, but also has the track record of placing and administering construction loans and mortgages for other owner builders.

Click Here To Speak Directly To Construction Mortgage Broker Joe Walsh For A Free Assessment Of Your Owner Builder Construction Financing Options

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

If you’re looking to secure construction financing for a self build construction project for a new single family residence you plan on occupying post construction, then its important to be taking a more holistic view of the construction financing process.

Depending on your individual situation, there can be two or three different construction related loans that may need to be arranged to complete the project.

In some cases, a loan is required to acquire the land and perhaps fund some site development costs. Then the actual building construction loan is used to complete the primary construction. And when the project is complete, a take out or long term mortgage is required to retire the previously registered mortgages on the property.

If the land is already owned outright, then a construction mortgage and a long term take out mortgage will still likely be required.

Thinking with the end in mind entails calculating out the effective rate of financing in the short term and the longer term for the entire project.

The combination of construction related loans that yields the lowest cost of financing is likely going to be your best option, all other things being considered.

For instance, a construction loan through a bank or institutional lender may yield the lowest potential construction mortgage available to you, but typically an institutional lender will automatically require you to secure a long term take out mortgage with them as well.

The combination of the two mortgages may or may not yield the lowest overall cost of funding over time as you are limited to the selection in long term mortgage rates and terms being offered by the lender and you will have virtually no bargaining power to negotiate down the rate based on competitive offers.

An alternative approach would be to select a private mortgage construction loan that does not require that you have a take out mortgage in place prior to the commencement of construction.

This will provide you with more time to shop the market for the best long term financing deal and typically once a construction project is nearer to completion, the offers can become more competitive.

Of course there is no guarantee that the combination of a construction loan from a private lender and a take out mortgage from an institutional lender will be cheaper, but it can be.

This is why its worth going through the exercise of comparing your options from the outset, including both the near term and long term financing in the process.

The best way to determine which way to go is to work with a construction mortgage broker who is well versed in both approaches to construction financing and can help you work through the different scenarios that are going to be directly applicable to your particular situation and requirements.

Click Here To Speak Directly To Construction Mortgage Broker Joe Walsh

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

“Here’s A Basic Outline of What You’re Going To Need To Apply For an Institutional Construction Mortgage For a Self Build Project”

With an institutional construction mortgage application, you are effectively applying for a construction loan and a long term take out mortgage at the same time.

For a straight construction loan where a take out mortgage is not a requirement of receiving a commitment, the focus is on the equity in the project. But with an institutional construction mortgage, the lender will determine mortgage eligibility of an individual application based on both equity investment and repayment assessment.

When applying for a self build home construction loan, here is the initial information that most lenders are going to want to see first.

• Designer Plans. Having a completed design or set of blueprints for a project provides a mortgage lender with not only an accurate outline of the project, but the amount of work gone into it and how close you are to actually starting construction.

• Contract With Builder or General Contractor. The construction mortgage provider is going to want to see that you are working with a reputable home builder and that their is a contract in place or drafted to be completed, including a quote for the scope of work they will perform for you.

• Deed of Land or Offer To Purchase. Construction loan applications will typically not be considered if you don’t have the subject property secured or have the ability to secure it through an accepted offer to purchase.

• Mortgage Application Form. The basic construction mortgage application form will outline the personal net worth of the applicants, a summary of their annual cash flow, and provide permission for the construction mortgage lender to conduct a credit check.

• Employment Confirmation. Because of the need to have the long term or take out mortgage approved at the same time, the applicant(s) also need to provide at least three years of earnings history supported by their Revenue Canada personal income tax notices of assessment and at two pieces of employment confirmation (T4 and a recent pay stub, or an employer letter and a recent pay stub).

There will likely be other information required, which can also very by the institutional construction financing source, but most will require the above items to begin considering your application for a construction mortgage.

Click Here To Speak Directly To Construction Mortgage Broker Joe Walsh

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