“Make Sure You Can Cover Off The Toronto Construction Loan Basics Before Applying For Construction Financing”

Toronto Construction loan basics are pretty much what’s going to be required for any type of construction loan in Toronto or anywhere else for that matter. If you want a construction mortgage lender to approve your project for construction financing, in the time you have to work with, then its going to be important to have the basics in place.

Failure to provide the fundamental information will get you declined and also waste time.

Here are the core things that all construction loan providers are going to what to see or know are in place prior to considering your application.

First, is the land owned and in control of the borrower and are the necessary licenses and permits for the proposed project in place? This is step one and without it, everything else you can provide is theory as it all depends on control and permission being granted to the owner, builder, or developer.

Second, do you have a detailed and complete set of building plans and drawings. A picture is worth a thousand words and failure to be able to clearly describe and outline your project can make it difficult for a lender to understand what exactly you’re trying to accomplish.

Third, make sure that you have a detailed and accurate project budget and time line of implementation. For all the numbers being provided, try to have as much supporting information as possible. For instance, all significant budget items like contracts and material supplies should be supported by signed agreement or written quotations.

Fourth, be clear as to the equity you either have in the project or will put into the project if equity is required. If you have it in the project, you should have a recently completed appraisal to support the current value of the property. If you’re going to invest it in the project, then you should be able to show proof of funds.

Fifth, outline who is going to be doing the building and/or general contracting, their resume, other credentials, and their contract.

Going in with the basics will allow you to get the lenders attention and move forward with the application process even if there are a few other things not yet available.

If you have a construction project you’re working on that will require a Toronto construction loan, give me a call so I can assess your requirements and provide construction financing options for your consideration.

Click Here To Speak With Toronto Construction Mortgage Broker Joe Walsh

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

“Here Are Three Key Steps To Getting Toronto Construction Financing In Place For The Terms and Rates You’re After”

When looking to secure Toronto construction financing for an Ontario based residential or commercial building project, you need to break down the construction financing procurement process in these three steps.

First, you need to make sure you’re applying to the most relevant construction mortgage lenders. All projects are going to have their own best supply fit and the sooner you zero in on the right audience, the faster construction financing will fall into place.

Second, once you’ve gone through the initial application process and found a construction mortgage lender that is prepared to commit to your project, you’re going to need to negotiate and finalize the conditions of a funding commitment. This is a step where lots of good funding opportunities fall to the way side due to the two parties failing to reach final agreement. Each project can have unique requirements and each lender will have its own funding policies, so its not a given that even though both parties are mostly in agreement that a final consensus on terms and conditions will emerge.

The last stage is actually getting the construction loan provider to issue a draw request. Before the first draw is advanced, the construction financing source does not have a vested interest in the project and can hold off advancing funds indefinitely if the lender does not feel that all the terms and conditions of funding have been properly met. Its not a given by any stretch that just because a signed commitment to fund a construction project is in place that funding will actually flow when its supposed to or at all.

Until all three steps have been complete, there is no Toronto construction financing. And because funding can fall apart at any point, there is always risk that there will be construction financing problems.

To increase your probability of both securing and getting a construction loan funded, its highly recommended that you work with an experienced construction mortgage broker that has experience navigating through all the things that can go wrong during the construction financing procurement process and help keep both your budget and time line on track.

Click Here to Speak To Toronto Construction Mortgage Broker Joe Walsh

The post Three Steps To Getting Toronto Construction Financing first appeared on Ontario Construction Loans And Mortgage Financing.

“Advantages To Locating And Securing Construction Financing In Toronto”

I get asked sometimes if there is any special or specific advantages to financing a construction project in Toronto compared to the surrounding area or places further away.

The reality is that there is a much higher concentration of construction lenders in Toronto than pretty much anywhere else in Canada. And the better the project, the more options that are going to apply. Even weaker deals are more likely to attract construction financing in Toronto due to the strength of the local real estate market.

For the stronger deals, rates are also going to be better as there will likely be competition among both bank and private lenders for more solid and lower risk deals.

Toronto based deals can also generate higher loan to value ratios at times compared to areas immediately outside the GTA.

Just remember that while you may be able to attract more construction mortgage lender attention, that doesn’t mean that Toronto based lenders are going to be any easier to deal with when it comes to requesting your draw advances, especially the institutional lenders. Regardless of where you’re located, the devil is always in the details when it comes to construction draws.

The keys to getting the best deal will always depend on giving yourself enough time to explore available options and being fully prepared for the information that’s going to be required by the type of construction financing you’re targeting.

Leaving things too long in any market, or going in semi prepared is going to make the process of securing construction financing more difficult, so basically the fundamentals are always going to apply. But at the same time, there can definitely be some distinct advantages of having your construction project located in Toronto or at least in the Greater Toronto Area, depending on the type of project you’re working on.

If you’re trying to arrange construction financing for a Toronto based project, I suggest that you give me a call so I can quickly assess your options and provide relevant Toronto construction financing options for your consideration.

Click Here To Speak To Construction Mortgage Broker Joe Walsh

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

“If You Can’t Pass The Pre-sale Test, There Won’t Be Any Construction Financing Advances”

For larger construction projects where the exit strategy for the builder or developer to pay back the construction is through the sale of finished residential or commercial units being built, then the key to not only getting approved for a construction loan as well as getting draws advanced will be your ability to pass the construction lender’s pre-sale test.

First of all, each lender is going to have their own way of assessing the number of pre-sales that are going to be required to get construction funded, but typically the proceeds from presold units will need to equal the construction costs.

Its also not uncommon for a builder or developer to have most of the pre sales in place at the time of loan approval, but still requiring additional sales prior to the first draw advance. But just because you have a construction mortgage commitment in hand, does not mean that the lender will have any leniency if you’re short a unit or two when money is required.

Even if you have all the required sales in place, you need to make sure that you can verify each sale to the satisfaction of the construction loan provider. And when I say each sale, please take me literally. Bank and institutional mortgage lenders are very much by the book in most cases, and will go through the supporting documentation for each sale you pledge as a pre sale to cover the construction covenant.

And while all lenders will have their own requirements and verification process, here are some typical things you can expect to be required. First, the pre sale agreement must be binding upon the buyer via a pre-approved sales agreement with a material deposit held in trust for the committed obligation. The amount of the minimum deposit may also be established by the lender. Second, the sales are going to have to be at arms length in order to avoid any contrived sales that are put together to make the presale quota. Third, block sales for several units will under go a higher level of verification to make sure the sellers intention is to truly purchase multiple units and that sufficient funds are being held to support the claim.

Click Here To Speak Directly To Construction Mortgage Broker Joe Walsh

The post Importance of Presale Verification For Construction Financing first appeared on Ontario Construction Loans And Mortgage Financing.

“Toronto Construction Loans Can Be Much Easier To Secure With Better Terms Than What You Can Get Immediately Outside The City”

If you are contemplating or are in the middle of a construction project in Toronto proper, then you’ll be happy to know that the construction financing options both in terms of available lenders and program options are much higher in the big smoke than areas just outside of the GTA.

The reason for this is simple. Toronto based real estate is always going to have an active market. The closer you get to the core, the more sought after land is, regardless of what’s sitting on top of it.

So for a construction mortgage lender, some of the typical risks associated with construction financing are not nearly as severe as they are in more outlining areas where the real estate market, no matter how strong, is not Toronto.

As a result, there are lots of lenders servicing a wide variety of construction financing niches in the area. Because of the competition for projects in prime real estate areas, private mortgage financing utilized for construction loans can also be slightly cheaper than in other areas.

But aside from rate, the biggest gain a borrower or builder can get when looking for a construction loan is the percentage of loan costs that will be covered. If the project is in a good location and has strong market dynamics, its not unheard of for a private mortgage construction lender to provide 100% of the financing costs. In most nearby markets, unless there is considerable equity available in the underlying property, its pretty standard that even private mortgage lenders will want you to pay for at least the first 20% of construction costs before the first mortgage advance can take place.

Banks and other institutional lenders are also more aggressive in the Toronto area for the same basic reasons. This doesn’t necessarily mean that bank issued construction mortgages are going to be any easier to deal with in Toronto compared to other locations, but it does provide more rate and term competition among lenders as financing on the long term asset through the construction take out mortgage will be a strong addition to any mortgage lender’s portfolio.

Click Here To Speak Directly to Construction Mortgage Broker Joe Walsh.

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

“There Can Be Significant a Difference Between Securing Construction Loans in the Toronto Area Than in
The Rest of Ontario”

Builders and developers tend to find out the hard way that the construction loans in Toronto are typically both easier to secure and can be acquired for a higher percentage of the project costs compared to most other areas of the province outside of the GTA.

The the differences can be significant with Toronto based projects securing loan percentages as high as 80% and out lying areas 50% to 65%.

With the current capital market uncertainty, its also getting harder for lenders to take interest in projects outside of the Greater Toronto Area.

Most construction mortgages are issued by private lenders and most private lenders have a preference for construction loans in the larger centers where the resale markets and property values tend to be more stable, or at least that’s their perception.

This is good news for construction projects close to Toronto and not so good for places farther away. Even in cottage country, where the resale market is still quite strong, there is more apprehension by lenders to get involved in larger projects, and when they do take them on, the cost of financing tends to be higher than what would otherwise be expected for a construction loan.

The net result is that builders and developers not only have to start working on arranging financing for their projects further in advance, but they also have to be prepared to sink more of their own capital into the projects due to the likelihood of securing lower loan to value ratios than they are used to.

And because there is more competition among lenders for Toronto area projects these days, depending on the exact project type and location, there are opportunities for great private mortgage construction rates as lenders try to get their money placed in order to get their targeted return on capital.

So to get financing in rural areas or get the best deal in the GTA, more time is likely going to be required in both cases to locate and secure the most relevant construction financing for the overall project or particular project stage.

This is where a construction mortgage broker can become very important to the process and just another reason why you should give me a call so that we can review your requirements and work towards getting you the best construction financing deal available.

Click Here To Speak With Construction Mortgage Broker Joe Walsh

The post Construction Loans In Toronto Versus The Rest Of The Province first appeared on Ontario Construction Loans And Mortgage Financing.