Mortgage financing for construction mortgages has been an area of expertise for me over the last few years. With close to 15 years in the new home construction industry as a supplier, sale manager and general manager I have the knowledge of what it takes to build and finance new construction.
Many times getting started in this industry can have a lot of issues such as finding land, locking in trades and most importantly financing the builds. One of the area’s that we have been very successful in is financing the small builder, with 5 lenders that range in size from private individuals to large private lenders that cover from BC to Ontario and have access to millions of dollars in capital.
One of the most important things for a small builder is:
– Be organized
– Have your plans ready and the lots picked out and secured
– Have your budget numbers firmly in place and
– Expect that you will need a contingency of 5 to 10% in that budget,
– Expect that you will be asked for a copy of the quotes for the budget as well.
If we have the lot and blue prints and specifications we would proceed with having an appraisal completed so that we can evaluate the final properties value.
As a small builder in Alberta you will be asked to provide New Home Warranty on your property, this is no longer something that can be avoided as it became law in 2014 and even a private lender will want it in place.
As a small builder in Alberta you can also expect that you will need to have your money in place as most private lenders will only look at financing 75% of the cost to build your project. This will in many cases include what is called soft cost such as permits, blue prints and legal which will all add up substantially in the beginning of your project. The deposits on lots of course would be part of your costs and in some cases builders will buy the lot out right and we would consider that part of your input.
If you are a small builder in Alberta and the bank has said no more lines of credit, as many have I would love to talk to you and help you get your financing in place. My expertise in construction will make the process that much easier as I speak the language and we can help you grow your business.
