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Group FSRA #10315

Rateplicity USA
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Construction Financing

Construction financing plays a pivotal role in Canada’s real estate and construction industry. The acquisition of a construction loan supports development, renovation, or the expansion of personal properties. Like other loans, this financing process is affected by interest rates and market conditions, but is a shorter term loan for construction projects.

If you are in need of construction financing, we have access to great products with the best rates available. The amortization for this type of loan is interest only. There is no maximum and no minimum amount that you are able to borrow, allowing you the funds to finish small or large construction jobs. By obtaining cost-effective financing, you will be able to successfully complete your project.

Schedule your free consultation to get expert mortgage advice, custom solutions, and a clear path forward—no cost, no obligation.

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Construction Financing FAQs

What are the features of this type of financing?
Up to 75-80% LTV as complete. The interest is paid only on funds advanced. There is also no early payout penalty if your project is done sooner than expected.
Who is Eligible for this Type of Loan?
Canadian citizens and permanent residents are eligible for construction financing. If you are a newcomer without Canadian credit history, we will consider other ways to prove that you are reliable in paying back the loan.
How long are the terms?
The loan is fully open for a 1 year term.
 

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What is the debt service?
Beacon <680 GDS 35% TDS 42%

Beacon >680 GDS N/A TDS 44%

This is based on takeout mortgage ratios.

How do the draws work?
Prior to draws, an appraiser will perform an inspection. Draws are based on project completion stats (%). Draws are subject to construction lien holdback. They will be released 60 days after contractors have been paid in full. There is no lender draw fee.
What are the fees for this type of loan?
$900 + HST Mortgage set-up fee, 1.25% lenders fee and closing costs paid by borrower. No draw fee. Appraisal fee will apply.

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How much down payment do I need for a construction loan?
Construction loans usually require a higher down payment of 25-30%. Lenders must be assured that the project will be completed within a certain time frame and that all the builders are licensed properly.
What is the difference between a construction loan and a term loan?
 

A construction loan is short term financing, which usually lasts no longer than a year. A traditional term loan lasts much longer and can be paid off over lengths of 30 years in some cases. A construction loan is meant to provide financing while a project is being built, whether it is a commercial or residential building. The building is then sold and the loan can be paid off.

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