A Preferred Construction Mortgage Lender.
Construction Mortgages.
Custom Homes, Renovations & Development.
Ontario, British Columbia & Nova Scotia.
What is a Construction Mortgage Loan?
Construction mortgages - how Do they work?
Construction mortgages are a critical area of DV Capital’s mortgage operation. A construction mortgage loan is a mortgage facility that provides homeowners, custom home builders and real estate developers with capital to build or develop real estate, from custom homes to subdivisions. Each construction project varies in complexity and requirements and requires a tailored approach. Funds are typically advanced in stages, thus providing the borrower with capital to make gradual progression without the lender over-advancing funds in relation to the property value at each respective advance. Very few traditional, alternative and private mortgage lenders provide construction mortgage loans. Construction mortgage lenders have specific underwriting guidelines and are selective with the types of projects they finance and to whom they provide construction financing. There are few construction mortgage lenders, given the additional risk, compared to residential mortgage lending. As a result, the traditional mortgage lenders that provide construction financing are rigid and have numerous restrictive underwriting policies. Therefore, depending on our client’s project and construction loan requirements, private construction mortgage financing might provide greater flexibility and reduce red tape. Construction mortgages are typically short-term financing products that convert, on completion of the build, to a traditional mortgage, known as a take-out mortgage, unless the client intends on selling the property after completion. DV Capital facilitates construction (custom home and spec-builds) and development financing across Ontario, British Columbia & Nova Scotia for homeowners, custom home builders & developers.
Custom home Construction mortgages.
Infill Custom Home construction financing.
DV Capital works closely with homeowners, real estate investors, general contractors and custom home builders that require renovation and custom home construction financing. Real estate owners typically contact us after speaking with a custom home builder and then provide us with information and documentation outlining an approximate cost to build and project and property details such as the design, dimensions and square feet. With this information, we can quickly determine the approximate value of the property or properties upon completion. Depending on the land value, the balances of the existing mortgages, the cost to build and the amount of money the client can inject into the project, DV Capital can quickly ascertain if and how they can structure a custom home construction mortgage. In other cases, clients will contact us either owning an existing property or wishing to purchase real estate that consists of a vacant lot or with existing structures needing demolition before construction commences. DV Capital provides custom home construction mortgage loans in Ontario, British Columbia & Nova Scotia.Â
Custom Home Mortgage Example.
Example: Toronto Construction Mortgage Lender.
Overview:
Property Location: Toronto, Ontario (Leaside)
As-Is Value: $1,200,000
When-Complete Value: $2,500,000 (3500 Square Feet)
Existing 1st Mortgage: $400,000
Cost-to-Build: $1,300,000
Required Mortgage: (1st of $1,750,000 or 2nd of $1,350,000)
Note: In this example, there’s an existing 1st mortgage of $400,000; depending on numerous factors, one might prefer keeping the existing first mortgage in priority and securing a second mortgage construction loan or discharging the existing first mortgage and rewriting a new first mortgage. In either case, the total required mortgage amount, including a buffer for closing costs and an interest reserve, does not exceed 70% of the when-complete value ($1.75M / $2.5M = 70% Loan to Value). In addition, the total mortgage provides the client with 100% Loan-to-Cost financing, a sought-after capitalization feature. DV Capital facilitates custom home construction financing across urban, suburban & select rural locations in Ontario, British Columbia and Nova Scotia.
Construction Loans for Spec Homes.
Private Lenders for Spec Home Construction.
A spec home construction mortgage provides a custom home builder with a construction financing facility to build a custom home without a contract or agreement in place with an existing real estate owner or purchaser; custom home builders go into spec builds to list the property for sale and secure a purchaser before completion of the custom home, or as soon as possible after the construction is complete. Spec builds present an additional layer of risk for the construction mortgage lender and the custom home builder alike, as construction will commence without an end-user purchaser in place. DV Capital facilitates custom home construction for spec-builds across Ontario, British Columbia and Nova Scotia, as well as inventory loans if the spec-builder requires liquidity before the sale & closing of the custom home spec build.Â
Rural Construction Mortgage Loan.
Rural Construction Lenders.
DV Capital provides mortgage construction loans to homeowners and custom home builders operating and constructing real estate outside major urban centres and locations often under-serviced by most construction mortgage lenders. A lack of construction financing is problematic for homeowners and custom home builders, especially as one can find great value, opportunity and lifestyle outside major city centres. We help those looking to purchase real estate, whether it be a raw, unserviced lot, a serviced lot, or an existing dwelling that one wishes to construct an addition on or demolish and rebuild. DV Capital works closely with those who intend to occupy their custom home as a principal residence or a second home, such as a cottage or summer home, or plan to sell the property on completion of the construction. Contact DV Capital to discuss your rural construction mortgage project and financing requirements in Ontario, British Columbia or Nova Scotia.
Custom Home Construction Mortgages.
DV Capital works with homeowners, real estate investors and custom home builders seeking construction financing options. Once you factor in the time and energy required, the land, labour, material, and soft and hard costs, construction financing requires capital, planning, and a reasonable and experienced funding partner. While each situation differs, they typically resemble one of the following situations. Note that loan-to-cost and loan-to-value ratio requirements vary based on project details.
Client Owns A Property: Demolish + Rebuild: The client currently owns a property they plan to demolish and rebuild. Accordingly, we will assess the property location, the value of the land, the details and balances of any existing mortgages, the cost to build the new home, which generally relates to 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, the loan-to-cost ratio and the loan-to-value ratio, the two main ratios used by construction mortgage lenders to assess feasibility, risk and profit. Although, in most cases, we can finance up to 100% of the construction hard costs, our client may need to inject capital into the project.
Client is Purchasing a Property: Demolish + Rebuilt or Build on Vacant Lot: The client is interested in purchasing a property with an existing structure they intend on demolishing or a vacant lot to build a property on. If the client purchases the property without a mortgage, there will be more equity, thus potentially attracting more financing options than if a mortgage was present, possibly at lower rates. However, if the client requires a mortgage to help purchase the property, we can assist them with a purchase + construction mortgage; this will be a two-parter. In most cases, the client must inject sufficient funds for the purchase and towards the total construction financing costs to satisfy construction lenders’ loan-to-value and loan-to-cost requirements.
Whether you are a homeowner, a real estate investor or developer who owns an existing property or wants to purchase a lot to build real estate, or a custom home builder seeking financing for a spec build before securing a purchaser, DV Capital is pleased to assist your construction financing requirements in Ontario, British Columbia and Nova Scotia.
Documents for a Construction Loan.
How to apply for a construction loan.
The documentation to support one’s construction mortgage financing request may include the following, particularly for custom home construction. Note that DV Capital will advise you as to which documents are required based on your construction mortgage requirements:Â
- DV Capital Mortgage Application
- Agreement of Purchase and Sale
- DV Capital Ordered Appraisal
- Detailed Construction Budget / Pro Forma Report
- Existing Mortgage Statement(s)
- Construction Permit
- Architectural Drawings
- Personal Net-Worth Statement
- Builder or Contractor Contracts
- Applicable Income & CRA Documents
- Construction Funding Request Summary
DV Capital works closely with homeowners, real estate investors, custom home builders and real estate developers across Ontario, British Columbia and Nova Scotia on custom home builds and development projects.
Construction Mortgage Loan Program.
Private Construction Mortgage lender.
- Custom & Luxury Home Construction Mortgage
- Multi-Family Apartment Building Mortgage
- Mixed-Use Construction Mortgage
- Row Town House Project Construction Mortgage
- Low-Rise & Mid-Rise Construction Development Mortgage
- Student Housing Construction Mortgage
- Commercial Building Construction Mortgage
- Industrial Building Construction Mortgage
- Hotel & Motel Construction Mortgage
- Places of Worship Construction Mortgage
- Subdivision Construction Mortgage
- Mid-Rise & High-Rise Condominium Construction
- Purpose-Built Asset Construction Mortgage
- Retail Plaza Construction Mortgage
General Inquiry.
Hear it from our Clients.
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