JESSE BRUN

If you're thinking about building your dream home in Waterloo, or if you’re a home builder looking for an alternative construction loan, we can help. In this article, we'll cover information about alternative construction loans in Waterloo, including how they work, what you need to qualify, and where to find the best deals.

What is an alternative construction loan?

An alternative construction loan is a type of loan that is specifically designed to finance the construction of a new home with alternative lenders such as private mortgage lenders. Unlike traditional mortgages, alternative construction loans are not strictly based on income proof, pre-sales and your credit rating. The alternative lender puts more focus on the equity and security rather than focusing on traditional mortgage guidelines.

The disbursement schedule is typically based on specific milestones, such as the completion of the foundation, framing, or roofing. The lender will inspect the construction site at each milestone to ensure that the work has been completed according to the plans and specifications.

Alternative construction loans usually have higher interest rates than traditional mortgages because they are considered riskier by lenders. The risk comes from the fact that construction projects can be delayed or go over budget, which can lead to the lender being stuck with an unfinished or unsellable property.

Why choose our mortgage office for your alternative construction loan?

Our mortgage office specializes in alternative construction financing for home builders in Waterloo. Feel free to visit our construction loan website which shows in more details our private construction lender solutions for home builders and developers in Waterloo. The website is: www.ezconstructioncapital.com

If you are tired of dealing with banks and not getting the financing support you need, we can offer you the best alternative construction loans. Our construction lenders in Waterloo are competitive and they support many home builders and developers looking for reasonable construction financing. Our lenders also have advanced methods to quickly fast-track the approval process. As a bonus, our lenders do not have any credit score, income, or presale requirements. Our lenders are equity-based lenders.

If your project is denied financial support by the bank or if you want to complete more projects faster, we are at your service to help you. Call (888)878-4660 and chat with us for an expert opinion about your project.

We are confident that when you connect with us, we can help to remove all headaches and hassles to get you the money to start your construction or development project as soon as possible. If you have money problems for your profitable projects, we have solutions.

Our mortgage office specializes in providing bad credit alternative construction loans in Waterloo. We have years of experience working with individuals who have bad credit, and we understand the challenges that you may be facing.

When you choose our mortgage office for your bad credit construction loan, you can expect:

• Flexible eligibility requirements
• Personalized service 
• Experience construction mortgage agent
• Fast construction approvals
• Expert advice & guidance

When choosing an alternative construction loan company in Waterloo, it's important to choose a company with a solid reputation and a proven track record of helping customers secure the best loan options for their needs. Our mortgage office has a team of experienced professionals who are dedicated to providing personalized advice and support throughout the loan process.

How Do Construction Loans Work?

A construction draw mortgage is structured to release funds to the borrower in stages, as construction progresses. Here's a brief explanation on how a construction draw mortgage typically works in Canada using 3 draws:

1. First Draw (Weather Tight): The first draw is issued when the construction project reaches the "weather-tight" stage, which means the building has a roof, windows, and exterior doors that can keep out the weather. This draw is intended to cover the costs associated with completing the exterior of the home, such as the foundation, framing, roofing, and exterior finishes.
2. Second Draw (Sheetrock Ready): The second draw is issued when the construction project reaches the "sheetrock ready" stage, which means the interior walls have been framed and are ready for drywall installation. This draw is intended to cover the costs associated with completing the interior of the home, such as insulation, electrical work, plumbing, and drywall.
3. Final Draw (100% Complete): The final draw is issued when the construction project is 100% complete, depending on the lender's policies. This draw is intended to cover the remaining costs associated with the completion of the project, such as landscaping, paving, and final finishes.

In general, the borrower will only pay interest on the funds that have been drawn from the construction draw mortgage, rather than on the entire loan amount. This can help to keep monthly payments lower during the construction period. However, it's important to note that the interest rate on a construction draw mortgage is typically higher than on a standard mortgage loan, due to the increased risk associated with construction projects. The lender may also require periodic inspections of the construction site to verify that the work has been completed before releasing each draw.

Below is a list of words that are associated with getting a construction loan. We are providing you the list along with their definitions to help you in your construction journey:

Appraisal: an estimate of the value of a property, typically done by a professional appraiser.

Title insurance: insurance that protects the lender and/or the homeowner against any title defects or disputes that may arise.

Closing costs: the fees associated with finalizing a mortgage or real estate transaction, including things like appraisal fees, title insurance, and attorney fees.

Lien: a legal claim against a property, usually filed by a creditor who is owed money by the property owner.

Mortgage broker: a middleman who helps borrowers find and apply for mortgages, typically by working with a network of lenders.

Construction-to-permanent loan: a type of mortgage that allows borrowers to finance both the construction and the long-term financing of a new home or other real estate project.

Construction contract: a legal agreement between a property owner and a contractor that outlines the terms and conditions of a construction project.

Disbursement: the process of releasing funds from a construction loan to pay for materials, labor, and other expenses.

Contingency fund: a reserve of money set aside to cover unexpected expenses that may arise during the construction process.

Building permit: a document issued by a local government agency that authorizes the construction of a new building or renovation of an existing structure.

Interest-only loan: a type of loan in which the borrower only pays interest for a set period of time, with the principal due at the end of the loan term.

Balloon payment: a large, one-time payment due at the end of a loan term, typically used in conjunction with interest-only loans or other non-traditional mortgage products.

Construction contingency: a reserve of funds set aside in case of unexpected expenses that may arise during the construction process.

Subcontractor: a professional hired by a contractor to perform specific tasks, such as electrical or plumbing work.

Change order: a written document that outlines any changes to the original scope of a construction project, typically used to update project plans and budgets.

Loan origination: the process of applying for and obtaining a mortgage loan.

Escrow: a financial account held by a third party, typically used to hold funds for property taxes, insurance, and other expenses.

Homeowner's insurance: insurance that protects against damage to a home or other property, typically required by lenders as a condition of a mortgage loan.

Title search: a process in which a title company reviews public records to ensure that there are no outstanding liens or other claims against a property.

Mechanics lien: a legal claim filed by a contractor or subcontractor against a property owner who has not paid for their services.

Loan servicing: the process of collecting loan payments, managing escrow accounts, and other administrative tasks related to mortgage loans.