You need the cash to finance a project or get a construction loan to cover materials and labour. You can also use one of these loans to purchase the land. These are more involved than conventional mortgage products.
The reason is simple: You’re borrowing money in the short term for a structure that has yet to be built. First, you’ll need to know that construction loans are more difficult to find than traditional mortgage products.
Start by looking at your financial situation carefully.
- You may be looking for construction loans to build a unique home. If that’s the case, you must first consider your debt-to-income ratio, credit score, and current income.
- The next step is to compare the loan terms and interest rates different lenders offer. Remember to look for any hidden charges or fees. Finding the right lender means looking for flexible terms and competitive rates that align with your financial goals.
Get Approved For Construction Loans
Getting pre-approved and/or pre-qualified is the first step. Before you jump into your plans and start building and buying land or undertake a significant remodelling effort, you’ll need to know how much money you can borrow.
There are some significant differences between construction loans and conventional mortgages, including the maximum amortization period. For example, a construction loan has a one-year maximum amortization, a commercial mortgage has 40 years, and a conventional mortgage usually has 25 years.
How you get the money is also different. For example, the draw schedule typically comes in four segments for a construction loan. A commercial mortgage, on the other hand, comes in one lump sum—the same as a conventional mortgage.
OMG Mortgage is the right company if you’re looking for construction loans. We have a combined experience level of over 75 years in the industry. The team here has industry experience as commercial bankers at Canadian financial institutions. That’s part of the edge we offer you, along with knowing the best way to package a deal.
