DV Capital is often approached by homeowner, real estate investor or custom home builders seeking construction financing options. Given the cost of land, labour, materials, soft and hard costs, construction financing requires capital, planning and expertise. While each situation is different, homeowners typically approach us facing the following two situations.  

Currently Owned Property: Demolish + Rebuild: In this situation, the client currently owns a property that they wish to demolish and rebuild. Accordingly, we assess the location of the property, the value of the land, the details and balances of any existing mortgages, the cost to build the new home which generally revolves around the square feet and quality of finishings, and the value of the completed property once built. Using this information, we can determine the amount of existing equity as well as the ‘loan to cost’ and the ‘loan to value’, the two main formulas used by construction mortgage lenders to determine the feasibility, risk and profit of the contemplated construction project. In some cases, we can finance up to 100% of the construction hard costs, however in other cases, our client may be required to inject their own funds into the project – this largely depends on the details of the project, primarily the equity and loan to value.

Purchase a Property: Demolish + Rebuilt or Build on Vacant Lot: In this situation, a party is interested in either purchasing an existing property with a structure that they intend on tearing-down, or purchase a vacant lot to build a property on. If they are able to purchase the property without a mortgage, naturally, there will be much more equity in the property that will help minimize a construction lenders exposure. However, if they are requiring a mortgage to help them purchase the property or lot, we can assist them with a purchase + build mortgage. This is a two-parter. The client must be able to inject sufficient funds for the purchase and towards the total construction financing costs in order to satisfy construction lenders loan to value and equity requirements. In either case, the client will then own the property and the construction financing and build will commence accordingly. 

Whether you are a homeowner or a real estate investor or developer that owns an existing property or wants to purchase a property to build, or a custom home builder wanting to build a spec-home prior to having a seller, DV Capital is pleased to assist your construction financing requirements in Ontario, British Columbia and Nova Scotia.