A construction mortgage is a mortgage that you take out when you’re building a new home and you need funding for the contractor so they can complete the project of building the home. But just like with most mortgages, there are different types of construction mortgages – a lot of them. In fact, there are six different types of construction mortgages, and each has their own subcategories. We’ve listed them below so that when you need construction financing, you’ll have an idea ahead of time what type you need.
Land Acquisition Loans
These types of loans are available for builders, homeowners, and homebuyers, depending on the situation. While it’s individuals that might be most interested in bare land that may or may not be developed, builders and developers usually are the clientele most interested in subdivided lots.
- Undeveloped bare land
- Partially developed bare land
- Serviced subdivided lots
- Unserviced subdivided lots
Site Development
If you are a builder, developer, or homebuyer looking to build a property on unserviced land, utility and sewer lines will need to be installed, and extensive landscaping may be required.
- Landscaping
- Road and sewer
- Utilities
Building Construction
This, as well as construction bridge loans are typically the construction loans that homeowners and homebuyers are most interested in. These loans are meant for the actual construction of homes, or additions onto existing homes.
- Renovation
- Addition
- New construction
Construction Bridge Loans
- When project costs overrun estimated quotes
- Additional funding for extras added to the project and not included in the original quote
- Termination of the original construction loan
Construction Inventory Financing
- Completed condo units as well as single dwelling units
Construction Financing Take Out Loans
- Long term mortgages
- Short term transition loans
Construction mortgages can be a bit trickier and a bit more complex than regular mortgages, or even second mortgages. Because these loans often need to be obtained at the last minute (such as when project costs run over) or when they have extenuating circumstances (such as construction bridge financing) it’s essential that those interested speak to Ontario mortgage experts. Here at CMI we can find lenders to provide you with home construction loans, first mortgages, second mortgages, and home refinancing. And if you’re a builder or developer, we can help you with the construction loans you need too!
