Construction financing is a specialized form of lending that does require a certain amount of knowledge to properly assess a financing application and to manage the risks associated with a construction project.
So even though most construction financing under $2.0M typically comes from private money sources, its a relatively small percentage of private lenders that fund these types of deals.
Taking it one step further, the private lenders that provide construction mortgages typically only work through construction mortgage brokers who know how to properly qualify applications and assist with the construction loan admin process as required.
As we’ve written about before, there are several key benefits of utilizing private mortgage financing for a construction project including a faster application and approval process, more straight forward and predictable draw administration, and greater flexibility with respect to arranging and securing a take mortgage if one is required.
At the same time, any type of construction financing can lead to problems if you don’t completely understand the terms and conditions of the mortgage, or they don’t correspond well with the requirements of the project.
One of the keys to successful construction financing is matching up your project and requirements with the right private lender.
There are many types of construction projects and several different approaches private lenders can take to fund a particular deal.
So its important to try to secure financing from sources that are most comfortable and competitive with what you’re trying to build.
A well established construction mortgage broker with a track record of locating and securing a variety of construction loans will not only get you connected to highly relevant private lenders, but will also be able to assist you with the draw management process and any other administrative issues that may arise during the advancement of the approved funding.
If you require construction financing for a project you’re planning or are in the middle of, I suggest that you give me a call so we can discuss your requirements together as well as go over relevant private mortgage construction options that can meet your needs.