Obtaining a loan when you are considering undertaking a construction property is a complicated affair. The normal process of applying for a loan for a house purchase involves seeing the property, valuing it and requesting funds. However, when the lender has no asset to secure on the process is intrinsically more risky and therefore often more difficult to secure.
Although it is possible to look for a loan company and apply yourself, you may find this a time consuming and difficult process. Most people prefer to use the services of a respectable broke, such as OE Mortgage. This firm offers a full service and can assist you not just in getting finance but in getting the project of your dreams off the ground.
There are several reasons why a construction loan broker in Toronto, such as the one mentioned, can assist you:
Knowledge of Process
The first benefit of this professional service is a familiarity with the process you need to go through before you start applying. Obviously you need to locate some land and calculate the cost of your construction project. You will also need to demonstrate affordability and, if you intend to sell the completed property how you will do this and how long this process will take. Additional items such as planning permission should also be discussed in outline before you start to raise any funds.
Only once you know the project is viable can you start looking for the funds. Your construction loan broker can guide you through the process to help ensure your loan application goes through smoothly.
Relationship with lenders
A good construction loan broker will already have established relationships with the major lenders in the field. This means that they will already know which boxes you need to tick and which lender is most likely to provide the funds you need. Again, they can help to ensure this process is completed smoothly and quickly.
A vast amount of experience in dealing with this type of project from start to finish will allow them to point out any obvious flaws in your plans and what information that the loan company may require before they can make a decision. The biggest question will usually be how the loan will be repaid after the project is finished and this will likely depend upon your intended use of the property. Your plan for repaying if you intend to live there will be different to the one that expects you to sell it within set time frame.
Many finance companies will provide you with pre-approval. This confirms you will be accepted for a specific amount subject to a variety of conditions concerning your construction project. Providing these criteria is met and the necessary evidence is provided you will be guaranteed to be able to access a specific amount of funds. A construction loan broker will know which lender will give you the best deal and can ensure you have this pre-approval in place before you start looking at land.