Construction Mortgages

“Wait, you’re a MIC that actually does construction?”

Here’s something that makes brokers do a double-take. Yes, we do construction mortgages. No, that’s not a typo.

But before you start sending us your client with the 580 credit score who wants to build their dream home, let’s be clear: these aren’t your typical MIC deals. We only do construction for bankable clients. People the banks would actually love to lend to.

So why would someone with perfect credit come to us?

The banks’ construction mortgage problem

Banks love construction mortgages the way cats love swimming. Sure, they’ll do it, but they’re going to make it as painful as possible for everyone involved.

We have and heard from brokers of banks taking over four weeks to get a draw. Think about that. Your client’s paying framers by the hour while waiting a month for the bank to release money that’s already theirs. Meanwhile, suppliers want payment in 30 days, trades need deposits, and the concrete pump truck doesn’t wait for bank bureaucracy.

Here’s what else banks love: receipts. Endless receipts. Invoices for every nail. Proof of payment for every 2x4. Your client becomes a full-time filing clerk instead of focusing on their build. Miss one receipt? Good luck explaining that to the underwriter.

How construction lending actually works (when it’s not painful)

Forget the bank’s way. Here’s our approach:

Land draws to 65% – Banks make you put cash in before touching land equity. We’ll advance up to 65% on the land value first. That’s real money, available immediately, no questions asked.

Progress draws, not receipt audits – Need money? We send an appraiser for a progress report. Whatever’s complete, we fund 65% of it. No receipt shuffle. No paperwork archaeology. Just “What have you built so far? Ok, here’s your money.”

Inter alia flexibility – Building a spec home? Use your primary residence as security. Got a rental property? That works too. One mortgage across multiple properties means more equity to work with.

Speed that matches construction – Equity available from the last inspection? Four hours to funds. Not four weeks. Four hours. Your framers get paid. Your suppliers stay happy. Your build stays on schedule.

Who actually uses this?

The custom home builder who’s tired of explaining to Big Red Bank why the foundation cost $2,000 more than quoted. Perfect credit, substantial assets, just wants to build without the interrogation.

The contractor building spec who needs to use their home equity for the project. Banks say no to inter alia. We say “makes sense.” They build, they sell, they profit. No bureaucracy required.

The doctor in Cranbrook building their $1.6 million dream home on acreage. Stellar income, perfect credit, and a healthy investment portfolio. But the property’s 20 minutes outside town and suddenly the banks get nervous. They want weekly reports, urban-level timelines, and someone in Toronto to approve every doorknob. We just see a good client building a nice house.

The perfectionist in Pemberton whose bank takes three weeks to approve a kitchen cabinet change. By the time the money arrives, the cabinets are discontinued. We fund first, let them sort details later.

Why traditional lenders make construction impossible

Banks treat construction like they’re funding a moon landing. Every dollar scrutinized. Every decision questioned. Every change a new approval process.

It’s not malice. It’s policy. Their construction departments run on procedures written in 1987. The loan officer knows it’s ridiculous to wait four weeks for a draw. They just can’t do anything about it.

We’re provincially regulated, not federally bound. When your client needs $50K for windows because the supplier has a two-week sale, we can actually think about it and say yes. Today. Not next month.

The premium question

Let’s talk rates. Ours are 2-4% higher than the banks. But here’s what most people miss: you only pay interest on what you’ve drawn, not the full approval amount.

That first $100K for foundation work? Sure, you’re paying an extra $200-400 per month versus a bank. But that’s also the stage that takes forever – foundation, framing, rough-ins. Six months of paying a small premium while actually getting your money beats six months of paying trades to wait for bank draws.

By the time you’re drawing the big money for finishings, you’re usually just weeks from completion. The expensive part of the build happens fast. The slow part – where banks really hurt you with delays – is when your balance is smallest.

Plus, here’s the kicker: insurable switch when complete. As long as the finished value is under $1 million and we’re at 65% LTV or less, your client qualifies for the best insured rates at completion. That 0.5% savings over five years? It more than covers what you paid in premium during construction.

Quick example

Contractor in Armstrong. Building a spec home. Perfect credit but needs to use home equity.

• Lot value: $300K (they’ll put up $105k, we fund $195K immediately)
• Construction budget: $400K
• Their home equity: $600K available
• Our solution: Inter alia mortgage across both properties
• First draw: $195K on land, no receipts required
• Subsequent draws: Every two weeks if needed, based on progress
• Exit: List and sell - we’ll accumulate interest until it does.

Banks would need six months of paperwork and still say no to the inter alia. We need 48 hours to say yes.

A note on who we won’t lend to

Construction for credit repair? No. Construction for someone who can’t qualify anywhere? Also no. Construction for first-time builders with no experience? Still no.

This product exists because good builders hate bad processes, not because they can’t qualify elsewhere. If your client needs alternative lending for credit or income reasons, send us their regular purchase or refinance. Keep the construction for people who could go to a bank but shouldn’t have to.

The bottom line

Construction lending through banks is like building a house with your hands tied. It works, eventually, but why would you?

Perfect credit plus builder frustration equals opportunity. Banks can’t fix their processes. We don’t have processes to fix.

In a province where construction season is short and weather windows matter, sometimes paying more to move fast isn’t just smart. It’s the only way that makes sense.