Builder inventory loan mortgages.
Construction Inventory Loans.
Financing Builder Inventory Loan Mortgages.
Servicing Ontario & British Columbia.
What is a builder inventory loan?
Unlock your home equity.
A builder inventory loan, also referred to as a construction inventory loan, is a form of short-term interim financing used by builders and developers to access capital secured against completed or substantially completed residential, commercial, or industrial units that have not yet been sold. Builder inventory loans are typically underwritten based on the type of property, location, marketability, pre-sale activity, if any, and the available equity in the property, or, where multiple units or properties are involved, the aggregate equity across the entire real estate inventory. Lenders also assess the loan-to-value (LTV) ratio, which represents the requested loan amount as a percentage of the total appraised value of the inventory being pledged as security. DV Capital facilitates builder inventory loans and construction inventory loans across Ontario and British Columbia, providing flexible financing solutions for builders holding unsold inventory.
When is a builder inventory loan required?
real estate inventory financing.
A builder inventory loan is typically required when a builder or developer has completed, or substantially completed, a residential, commercial, or industrial property that has not yet been sold or leased, and capital remains tied up in the unsold inventory. In many real estate developments, builders aim to pre-sell or pre-lease units during the construction phase in order to repay construction financing and equity investors upon project completion; however, market conditions, absorption rates, or buyer delays can result in one or more units remaining unsold after construction is complete. In the case of speculative or custom home builds, where a property is constructed prior to securing an end-user, a builder may need to refinance an existing construction loan with a builder inventory loan, which functions as a short-term, equity-based mortgage until a buyer is secured and a closing date is established. Once the property is sold and sale proceeds are received, the builder inventory loan is repaid and discharged from title, allowing the purchaser to receive clear title. In addition, builder inventory loans can be used to unlock equity from unsold inventory to support cash flow, repay construction debt, or advance other development projects, and in some cases, may allow builders to avoid discounting or underpricing inventory in order to achieve a quick sale, thereby helping preserve equity and overall project profitability.
How Inventory Loans Differ from Construction Loans.
Builder & Developer Private Lending.
Builder inventory loans differ from construction loans in that construction financing is used to fund the acquisition of land and the costs associated with building a property, while a builder inventory loan is secured against completed or substantially completed real estate that is being held for sale or lease. Construction loans are typically advanced in stages based on construction progress and are underwritten primarily on development risk, cost-to-complete, and builder experience, whereas inventory loans are equity-based, short-term mortgages that focus on the value, marketability, and available equity of the finished property rather than construction risk. In addition, construction loans are generally repaid or refinanced upon project completion, while builder inventory loans are used after construction to bridge the period between completion and sale, providing builders with liquidity without requiring the immediate disposal or discounting of inventory.
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