Arranging Construction Take Out Loans

“Current Market Conditions Indicate That A Construction Take Out Mortgage Should Be Arranged And Secured Sooner Than Later”

If you’re a home owner financing a self build construction project through an institutional lender, then you will already have your construction take out loan arranged at the beginning of the project at the same time as the construction loan gets approved.

But if the construction loan is coming from a private lender, which is the case with most self build projects, the take out mortgage may not need to be in place for the construction loan to get approved, allowing for more time to shop around for the best rates and terms.

While this has tend to work well in the past for many borrowers, the realities of the present mortgage market should cause you to rethink this approach.

With long term mortgage rates already going up once in 2010, there are indications that additional increases will follow. So the longer you leave the process for securing a construction take out mortgage and locking in a rate, the more likely it will be that you’re going to be paying a higher rate of interest for the near future.

The easy solution is to put in the extra time at the start of the project to get a long term mortgage secured so that you can get back to project management and not have to worry about what interest rates are doing.

At the very least, if you project is expected to be completed in the next 4 months, apply for a pre-approved mortgage and get a term rate locked in for the next 120 days. This will at least provide you with some rate protection if long term mortgage rates continue to rise in the short term.

If you don’t feel you have time to get everything in place right now, then take advantage of the services of a mortgage broker to do all the leg work for you with respect to shopping around for a long term construction take out loan. This will allow you to stay focused on your project while still working towards getting all the mortgage arranging taken care of.

If you are considering a self build project or are in the middle of one that’s going to need a construction take out loan, then give me a call and I’ll work with you to get the best take out option in place as soon as possible.

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About the Author Joe Walsh

I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel