Lower Cost Construction Loans
“There Is A Recipe For Getting Lower Cost Construction Loans”
Lower Cost Construction Loans in Toronto or the rest of the Greater Toronto Area area always going to be a function of the quality of the project.
And when I speak of lower cost, I’m not potentially referring to the lowest interest rate you could secure. My reference here is more to cost within a category of construction financing.
For instance, the lowest cost category of construction mortgage loans is from a bank or institutional lender, but many property owners and builders will still not choose this source of financing and prefer a private mortgage financing option for a number of different reasons.
Regardless of what type of construction mortgage you select or prefer, there can still be a pricing range for the financing costs in that range, whether that is within the discretion of the individual lender or a function of competition.
And the better projects are going to get better or lower cost construction financing offers.
There are many things can be considered by a construction mortgage lender with respect to deeming that a project is worthy of a lower rate of interest. Lets go through a few of them.
Project Scope And Location: A project that is located in a well developed market area for similar projects where the market is very active and resale value fairly predictable is going to be more interesting to construction lenders in general than a project that does not have these location and scope characteristics.
Project Organization: The more detailed the project plans, budgets, and time lines as well as the compliance with regulatory requirements at the time of the construction financing application, the stronger the project is likely going to be in the eyes of the lender.
Builder Track Record: If you’re working with a builder or are a builder with an established track record that is documented and can be supported by third parties, then there is going to be more confidence in the overall building process.
Any type of financing is about eliminating or reducing the risk of loss. The stronger a construction project is in all the areas above as well as in other areas that could impact the positive completion of work, the more likely it will not only attract considerable lender interest, but construction mortgage lenders will be prepared to compete for the project which is ultimately what we’re looking for to secure the best potential financing costs in the construction loan category of interest.
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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