Construction Mortgages

“Construction mortgages? Wait really? You guys will do them?”

Simple answer, yes!!

We hear it all the time from brokers. The shock, the surprise, the cautious optimisim. But the good news is, yes, we are a MIC that will lend on construction mortgages. In fact, we do a lot of them. But there’s a caveat: we’re not underwriting these like a normal MIC mortgage. Yes, we offer Construction Mortgages, but we only do so on bankable clients. We’re not interested in doing a construction mortgage for past bankruptcy or even someone with a credit score in the mid-600s.

Why Us?

So why would you use us for your construction mortgage? Flexibility, greater allowance on equity, speed of draws and insurability. Let me explain.

1. Flexibility: We’ll inter alia other properties to come up with the required equity for the construction. We can lend in areas others won’t consider. We don’t income qualify the build mortgage. We’ll even consider owner-builder builds or owner-gc builds so long as the owner has past experience building. Oh, and we have no fixed draw schedule. Only want to borrow at the end? Fine by us. Want a draw every week? Sure, if you’re okay paying our draw fee ($100), have at it.

2. Allowance on Equity: This one is simple: we will leverage up to 70% LTV (depending on the community’s max LTV )of the land in draws before your clients need to put any money in. That is especially helpful, because we then leverage the as-complete value that was created using that land draw, in the next construction draw.

3. Speed of Draws: If you’ve ever done a construction mortgage with a bank or credit union, you know that the time from needing money to getting money can be as long as four weeks. When you’re trying to coordinate tradesmen and their scheduls while also trying to make sure your bills are being paid on time, a delay like that doesn’t work. If there is equity available (a progress inspection report was previously done with equity available), we aim to get funds out the door in under 4 hours. Hours, not weeks. If there is need for a progress inspection report, we ge it ordered right away and are usually advancing funds within two days of being asked. Not paying interest while you wait for the bank to get you money saves you money.

4. Insurable: Like all of our mortgages, our construction mortgages qualify for an insurable switch. You read that right. Once the home is complete, since we are almost always under 65% LTV, so long as the final property value is under $1,000,000, your client will qualify for an insurable switch at multiple monlines. Since it’s at or under 65%, they’re usually going to get the best insured rate. So, instead of 5 years at uninsurable rates, you can tell your clients they’re saving around 0.5% for the term of their take-out mortgage.

Who uses you?

Most of our construction mortgages are for either AAA clients looking for no-hassel construction mortgages building custom homes, or contractors looking to build spec homes using their current home’s equity (inter alia) for their portion of the DP. Brokers like us because their clients like us and we make construction mortgages go from something brokers dread doing, to something fairly easy to do.