Construction Mortgage Lenders Need To See Progress
“Understanding What’s Important To A Lender Once The Project Starts”
I would say that all construction mortgage lenders get concerned when there are delays in construction once the funds for building have been approved; some more so than others.
One of the keys to keeping your project financing in order is to keep the project on track and progressing according to the time lines provided when the application for a construction loan was made.
While many projects end up scrambling for construction financing once everything else is in place, the opposite is also true where financing has been approved, but delays occur because the drawings are not complete, or permits have not yet been issued, or a construction contract has yet to be finalized, etc.
When there are delays in starting or completing a certain stage of work, the construction mortgage lender can become more than a bit nervous and in some cases may decide to withhold, suspend, or even cancel their commitment to fund.
Depending on the terms and conditions of the mortgage agreement you sign, the lender will likely have clearly spelled out rights related to timing of project commencement and completion. If the project is in violation of performance related conditions, the lender will have certain rights they can exercise, which could include not advancing any funds or any further funds against the project.
This is just another reason why project management is so important to a construction project.
When problems do arise, the lender should always be kept in the loop in terms of what the issue is, how its going to be resolved, and when. Dead air between the borrower and lender is not going to healthy when you get into a delay situation. At the same time, over communicating can also raise unnecessary red flags about the project.
The key is to make sure that you are working with a lender that will work with you and be reasonable if any issues arise that do cause delays.
This is also another reason to make sure you’re working with a well qualified construction financing specialist who will not only match you up with a relevant lender, but also help you administer the mortgage advances and help advocate for you when there are issues that impact the progress of the project.
There can be a certain amount of skill and even diplomacy required at times to keep the lender happy and the money on hand to complete the project when the delays have been addressed. This is where your mortgage broker can make a big difference to the success of your project, well after the financing was approved.
The best first step is to give me a call and I’ll quickly perform a free assessment of your construction financing options that we can go over together.
Or if you have a project with financing issues, I would still suggest you give me a call and lets see if we can get it sorted out for you and get your project back on track. I work with several construction mortgage lenders and I maintain a solid working relationship with each of them in order to provide more value to the overall process.
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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