Construction and Land Financing

Residential, Commercial, and Land Acquisition

We work with builders and developers throughout Ontario, tailoring financing solutions for construction projects both large and small. Whatever size of project, we will work to customize a plan to fit your unique mortgage needs.

With access to several different lenders, including access to our own in house financing we are confident we can help you with your next project and provide the best rates available.

Residential Construction Financing

What is a Construction Mortgage?

A construction mortgage is also referred to as a builder’s mortgage, is a short-term arrangement made to finance any real estate related projects. To get started, a loan is taken out to cover all related costs of the project. This helps the project get started before a more permanent source of funding becomes available, that allows the borrower to draw funds at predetermined stages of the construction process. At the end of the project, the property is refinanced into a conventional mortgage.

The funds in a Construction mortgage are released in stages at various levels of completion. Prior to each advance, an inspector will go to the property to ensure each stage is completed with accuracy before releasing the funds. See the example provided below.

Example Stages/Draw Schedule:

Stages / Draw Required Building Completion Construction Stage Percent of the Total Mortgage Amount Advanced
1st Draw
15% Complete
Excavation and Foundation Complete
2nd Draw
40% Complete
Roof is on, building is weathered (airtight and access secured)
3rd Draw
65% Complete
Plumbing and wiring started, drywall is complete, furnace installed, exterior wall cladding complete.
4th Draw
85% Complete
Kitchen cupboards installed, bathrooms complete, and doors hung.
5th Draw
100% Complete
Ready for occupancy

* Note this is an example – Stages/Draws are specific to each lender and determined during the approval process.

Construction Mortgage Application Process 
Step 1: Borrower will be required to obtain architectural drawings. The drawing must include floor plan, the exterior of the property, dimensions, descriptions of materials to be used, and more. The drawings will then be submitted to an appraisal company to determine the value based on the specifications provided.
Step 2: Using the plans in Step 1, the borrowers should obtain a quote from the builder. Keep the quote together with the initial plans for the project.
Step 3: The builder should issue a contract with all costs associated with the build drawn into a schedule. The contract should align with the quote provided Step 2, and will assist with funding to ensure the money reaches the builder prior to the start of the project. 

Step 4: At this stage, the worksheet along with the drawings will be submitted to the lender. The lender will use these documents to determine the maximum loan amount.  

Commercial Construction Financing 

A Commercial Construction mortgage is designed for developers and contractors that require financing for a real estate development project. We are committed to finding you the best market rates and flexible mortgage options. 

What is a Commercial Construction Loan? 

A commercial construction loan is used to finance the costs associated with the construction or renovation of a commercial property. The funds obtained for a construction loan can be used to pay for labour and materials for the construction of a new property, the purchase and development of land for a new commercial property, or the renovations of existing properties.

Commercial Construction loans are structured to be released in stages. The borrower will usually work with the lender to create a draw schedule. This means that only predetermined percentages of the total loan amount will be released as the project reaches certain percentages of completion. At each stage of completion the lender will typically require an inspector to confirm that the work has been completed before releasing the next draw to the borrower. This process will continue until the project is completed and the full loan amount has been released.


Commercial Construction Financing Application Process

During the application process, the lender will review the borrower’s personal and business financials, and their credit scores. Based on the information provided the lender will determine if they will approve the application, the interest rate, and terms of the mortgage. 

A formal business plan is often required with the application as construction loans are considered to be risk-risk from a lender’s perspective. Our team can help you through this process and ensure your plan is structured in the proper manner. In addition to the business plan, the borrower will also be required to provide details pertaining to the project, including estimates for contractors, materials, and other expenses. 
In some cases, personal and business financial documents will also need to be submitted as part of the application process. These items include, personal and business tax returns, business bank statements, income statements, and credit reports to indicate the borrower’s debt obligations. 

Land Acquisition

Whether you are looking to build the home of your dreams, build multiple homes, subdivisions, or commercial buildings, we are here to make that dream come to fruition. 
Obtaining land financing can be more difficult than applying for other types of mortgages, which is due to the fact that there is no structure on the property to act as collateral to the loan. Because of this lenders view these types of mortgages as a high risk investment. 
Things to consider before applying for a land mortgage
  1. Initial cash requirements to develop vacant land: Lenders will not issue money in  advance for the purchase of land or for deposits to the developers. The borrower is required to have the liquid funds available to cover the down payment. Typically, lenders will want at least 35% of the purchase price put down as a down payment.
  2. Will the subject property meet the criteria for financing: The property is the security for the lender, in the event that the borrower defaults on the loan. The lenders will want to ensure that if this happens that they will be able to sell the property in order to retrieve their money. In order to confirm the property’s value, the lender will request an appraisal from one of their approved appraisers.
  3. Zoning: Zoning controls how the land can be used. For instance, if you were to purchase a property zoned for agriculture purposes, that land will be required to be primarily dedicated towards agriculture. A zoning bylaw amendment or rezoning request can be brought forward by the municipal level, however, this is a lengthy process with no guarantee of approval.
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