Choosing OMJ Mortgage Capital for construction loans is smart. We are proud of the services we provide including unbiased independent advice. We will guide you through the process from preapproval to final commitment and closing.
Streamlining these types of loans for fast approvals and closing is important. Here are some tips for simplifying the process.
- Remember some lenders consider these risky because the asset has not been built yet. Although the amount of the down payment can vary depending on project type and lender, 20% of the entire project cost is an average benchmark.
- Understand the difference between construction loans and other types of products when it comes to amortization periods. For example, the maximum for one of these loans is one year. That compares to a maximum of 40 years for a commercial mortgage and 25 for the more conventional type.
- These loans are also called draw mortgages. They are paid out in stages during the construction. Typically for construction loans, there are four draws. A commercial mortgage and a conventional mortgage usually involve one lump sum each.
It’s also important to remember that many lenders only allow for four draws. However, there can be some flexibility depending on the institution you’re dealing with. Builders need to remember this. Lenders send an appraiser before each draw. Finally, construction loans don’t foreword the amount of any draw to a contractor.
There’s a Builder’s Lien Act that withholds 10% from any of the payments that you make to general contractors. These regulations are different province by province. You can read more about Ontario’s Construction Lien Act here.
If you need help applying for construction loans, get in touch with us. We have an excellent track record of being able to fund and structure complicated deals.
