Construction Mortgage

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We Provide No Hassle Construction Mortgage Financing in Toronto

Construction Mortgage in Toronto or construction mortgage financing is an essential part of any construction project. We provide construction mortgage in Toronto for commercial, residential and industrial projects.

To begin a construction project, builders have to understand what is required of them and how this construction project will affect allocated cash reserves within the project budget. Many builders tend to make mistakes by putting all funds towards the down payment, while underestimating project cash flow requirements.

Each construction project is different due to its size and nature of development. That is why the priority # 1 for any builder is a well-prepared budget, concise schedule and sufficient cash reserves.

New builders sometimes do not realize how Construction Mortgage in Toronto works and tend to put themselves in difficult situations by borrowing “expensive” money in order to save the project. 

A Construction Mortgage in Toronto is a form of mortgage financing and must be secured by the land plus improvement value, which together amount to total project value. If land has little or no mortgage, then the builder is able to receive the first draw of financing at once.

Otherwise, the builder should have sufficient cash reserves to begin the construction, which will in turn increase the value of the project, allowing the builder to receive the first draw of financing. Lenders do not give money upfront, they release money in draws. Amount of each draw is based on the value of the project or construction budget.

A construction project may have a variable number of draws. Usually a single home construction will have 3 – 5 draws, when planned carefully.

Most common stages, after which draws occur, are:

1) Basement and foundation

2) Framing, roofing and enclosures

3) Interior work, electrical, and exterior finishes.

4) Any final outstanding work indicated in the construction budget.

At the end of each stage, property is inspected by the lender, or such inspection is assigned to a third party, to ensure that work is completed according to the contract. The goal is to have as little draws as possible, because each draw incurs inspection and legal costs.

With large residential and commercial projects, number of draws will vary significantly.

We offer our clients several options for construction mortgage financing:

A) Construction financing using one institutional lender

B) Construction financing using specialized construction lenders

C) Private Construction mortgage financing

D) Combination of A) institutional and C) private construction mortgage in Toronto.

E) Joint Venture – a profit sharing partnership.

Each solution is tailored for specific situations. A large amount of equity will generally allow you to receive financing from a financial institution at lower rates, and later provide an option to convert Construction Mortgage into a long-term residential or commercial mortgage. On the other hand, less equity requires access to specialized or private lenders, who are willing to take on a larger risk.

Having a lender, who will finance a construction project with an attractive interest rate, does not necessarily mean finding a good source of funds. Terms and conditions that a lender may impose, might negatively affect construction, slow down the project and diminish profits.

That is why all terms and conditions have to be clearly outlined and understood before signing the documents. At Home and Mortgage Advice, we provide financing that meets our clients’ project requirements, while avoiding potential future complications.

Even after we have decided on the financing option, sometimes the most difficult part is maintaining communication between the lender and the builder, especially when something does not go according to plan.

This is where our expertise comes in. In case unexpected problems arise, we take care of the crucial communication with the lender. We make sure the lender is well informed throughout the duration of the project, so that the builder can concentrate on the building aspect. We make sure each project runs smoothly from start to finish.

As you may already know, each project has its obstacles. Let us assist you in securing the best construction mortgage in Toronto, while helping you work through issues that may arise along the way. Let us allow you to do what you do best – BUILD.

Call us at 905 691 6706 to get an assessment of your current situation, and find out how you can set up a construction financing plan that is right for your project.


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