How to Navigate Construction Loans With Nick L’Ecuyer of Mortgage Wellness
Barrie, Canada - November 15, 2023 /Mortgage Wellness/
Building a house from the ground up is a great way to get a customized home. But just like buying a home, building one isn't cheap. You need to secure a loan to finance the construction process.
Luckily, you can look into construction loans in Barrie, ON, to help you access the cash you need to get started. With the money, you can purchase land, labor, and materials and build your desired house. Nick L'Ecuyer of Mortgage Wellness is here to help you fund your vision by providing you with a construction loan.
A construction loan is a short-term loan used to cover the costs of building a house. It can cover the costs of purchasing land, taking out permits, creating plans, and paying for materials and labor. If you already own a piece of land, it can be the collateral for the loan.
In most cases, the loan will be issued for a period of one to two years. That's the average period most construction projects last. Since this is a short-term loan that depends on the project's progress, the lender will want information about the construction timeline and a realistic budget.
After the loan is approved, you don't receive the loan as a lump sum. Instead, the lender will be making payments to your builder in installments at various construction stages. In a way, a construction loan is like a line of credit where you can access money regularly up to a certain amount.
During the construction phase, you'll likely only need to make interest-only payments on the loan. Budget properly for these interest payments at the beginning of the project. Factor in your bills and create a budget to ensure you meet your other needs while repaying the loan. This will facilitate a smooth cash flow and construction process.
After construction, your loan will be converted into a traditional mortgage. From there, you will now be servicing a construction-to-permanent loan. Also, you won't just be making interest payments but the principal as well.
When looking for a construction loan, the process is almost similar to that of obtaining a mortgage. One thing you'll need to do first is hire a licensed builder. Find someone who has completed construction projects to be in charge of your project.
After that, you must prepare your documents and get preapproved for the loan. Mortgage Wellness makes the process of getting a construction loan in Barrie, ON, very easy. We will explain what documents we need from you and take you through the application process.
Understand that while a construction loan has a lot of benefits, you will be dealing with a construction project that faces challenges. Careful planning, working with experienced contractors, and setting aside a contingency fund can help you mitigate unforeseen circumstances.
More people are choosing to build their homes instead of buying, thanks to the availability of construction mortgages in Barrie, ON. At Mortgage Wellness, we are on a mission to help you build a home by simplifying the application process. Reach out to our office to get started on a construction mortgage.