Importance of Draw Management To Ontario Builders
“When It Comes Right Down To It, The Most Important Part of an Ontario Builder Loan is Draw Management”
The bigger the job, the more difficult it is to manage cash flow of a construction project.
In fact, of all the construction financing aspects that are going to be important to an Ontario builder, the one that is viewed to be the most critical by many is draw management.
Being able to rely on the predictability and timing of construction draws is something that long time builders don’t take for granted and can easily be ranked as more important than the financing rate being charged to some extent.
Why?
If you’ve been a builder for any length of time, you will know first hand what its like to have to fight with your construction mortgage lender about draw advances in terms of getting them paid out on time and not having them be reduced by what appears to be very arbitrary assessment criteria at times.
The reality is that almost any construction project that requires construction financing is going to have a certain amount of draw management grief. The key is to minimize it and keep the project on track as much as possible.
For larger construction projects in competitive markets, builders may be able to create significant deal competition among lenders as each one tries to win to the business. This can potentially result in better rates and terms for the resulting Ontario builder loan.
The key watch out however, is making sure you end up dealing with a construction mortgage lender that has a reputation for being there when the draws are required versus someone who is known to be aggressive on rate to win jobs at times, but can be difficult to work with or unpredictable when it comes to advancing money.
If you’re going to take a flier on a new source of construction financing that you haven’t previously worked with or don’t know much about in an attempt to shave some of the interest cost out of your budget, just beware of the potential trade off you could be making and what the down side of such a move could cost on the flip side.
Its pretty much like anything else in life…the more predictable something is, the more its worth and worth paying for.
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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