Construction Loans
Costs: Pay only the interest while you build
Unique: Loans specialized for construction needs
Flexible: If construction stalls, you only pay part of the loan
Experience: Lenders are knowledgeable and can help guide a project
Construction Loans
Lending Overview
In high-cost markets, smart businesses save money by building instead of buying. Construction loans work by offering tiered financing that pays out in stages based on your project’s progress. These loans are structured to provide flexibility and financial support throughout the construction process. If there’s a hitch in your plans, you won’t be stuck paying the whole loan, only the milestones that have been funded. While your project is under construction, you pay just the interest on the loan. Construction loans require the principal when the project is complete. However, you can roll the principal into a long-term commercial mortgage when you use term-to-perm financing. Land acquisition and development loans (A&D) give you the financing you need to prepare land before starting construction. Grading, surveying, inspections, and utility infrastructure can all be handled under one convenient loan. Whether you want to build retail shops, high-rise hotels, or mixed-use properties, there’s a construction loan that will help you do it. Speak with a broker to get matched with the right financing.
The Funding Lane
How to Effectively Apply Funds
Construction projects require meticulous planning and collaboration with reliable contractors. Renovation loan, home construction loans and securing construction loans follow a similar path. To successfully get a construction loan, presenting detailed plans and establishing a relationship with approved contractors are crucial. Start by presenting your project’s blueprint and financial projections. Our experts will guide you through each step, ensuring you meet the criteria to qualify for funding.
You’ll work closely with your lender to determine a set of milestones specific to your project. Once you achieve a milestone, you receive funding for the next phase, continuing this process until construction is completed. Construction loan lender brings a wealth of experience in the industry and understands what to look for in a robust plan. They can provide valuable advice and steer your project in the right direction. Additionally, brokers play a pivotal role by guiding you to the lender best suited to your needs.
Land
Buy and improve land with a land acquisition and development loan from our network of lenders. Prepare by grading, removing debris, installing utilities, and creating roads ahead of upcoming construction. We’ll help you find the best financing for all levels of your project and help you get it done right.
Building
Once your property is ready to build on, consider a construction to permanent loan. This option is particularly advantageous as it transforms into a traditional mortgage after construction ends, allowing for seamless financial transition and interest savings similar to those of a traditional mortgage loan.
Renovations
Construction loans aren’t just for building from the ground up. Use one to tackle renovation projects to hold or flip. No matter what the size of your next business is, we have a loan to cover your costs and get your commercial property looking like new again. Ask us for details!
TYPES OF CONSTRUCTION LOANS
Understanding the different types of construction loans can simplify your approach to financing building projects. These specialized loans are designed to meet the unique demands of construction and vary based on project needs and borrower preferences.
OWNER BUILDER LOANS
An owner builder loan is designed specifically for individuals who wish to act as their own general contractor on a building project. These loans provide the homeowner with direct control over the construction, offering a hands-on approach to managing budgets, materials, and labor. This type of loan is ideal for those with construction experience or those who want a more personalized involvement in building their home.
CONSTRUCTION TO PERMANENT LOANS
A construction to permanent loan combines the immediate needs of building with long-term homeownership, minimizing initial costs by requiring interest-only payments during construction. After completion, this loan converts into traditional mortgages, eliminating the need for multiple closings and reducing administrative costs and interest rate risks.
STAND-ALONE CONSTRUCTION LOANS
For those needing distinct financing phases, stand-alone construction loans fund only the construction period. Borrowers must either pay off the construction debt or refinance into a permanent mortgage post-construction.
CONSTRUCTION ONLY LOANS
A Construction only loan funds the construction phase without the commitment to convert into a permanent mortgage. These are ideal for investors who plan to pay off the loan or refinance once construction is complete.
RENOVATION LOANS
Tailored for significant remodeling or rehabilitation, renovation loans adapt construction financing to smaller projects or updates to existing structures.
Each loan type offers specific benefits suited to different project scopes and financial situations. Understanding these can help you choose the right financing for your project. Consulting with a financial advisor or loan broker is advisable to ensure you find the best fit for your construction needs.
BENEFITS OF CONSTRUCTION LOANS
Considering a construction loan for your building project? Explore the distinct advantages that these specialized loans offer over traditional financing options:
- Phased Payments: Construction loans allow for staged payments based on project milestones, providing financial flexibility and ensuring funds are available when needed.
- Interest-Only Options: During the construction phase, borrowers typically only pay interest on the funds drawn, helping to minimize initial costs and improve cash flow.
- Flexibility in Handling Challenges: Construction loans offer flexibility in addressing unforeseen challenges or delays during the building process, enabling borrowers to adapt their financing as needed.
- Tailored Financing: Unlike one-size-fits-all traditional loans, construction loans are tailored to meet the specific needs of building projects, providing customized financial solutions for developers and investors.
Learn More
FAQ’s
We believe that the more you know, the better the decisions you make. And in the financing world, better decisions mean lower rates, better terms, and increased profitability.
These FAQs are only the start. Our team is here to answer all of your questions and support you in finding the best financing solution for your unique scenario.