Construction Loans

Key Features of Construction Loans

• Short-Term Financing: Designed to cover the duration of the construction phase.
• Flexible Disbursement: Funds are released in stages based on the progress of the construction.
• Interest-Only Payments: Borrowers may only need to pay interest during the construction period.

Short-Term Financing

Construction loans are typically short-term loans, often lasting for 6 to 12 months, allowing borrowers to finance their building projects without long-term commitment.

• Quick Access to Funds: Get the money you need to start your construction project without delay.
• Transition to Permanent Financing: Easily convert your construction loan to a long-term mortgage once the project is complete.
• Focused on Your Project: Keep your financial burden light during the construction phase.

Flexible Disbursement

Funds from construction loans are typically disbursed in stages, based on construction milestones. This ensures you only pay for what you need at each phase of the project.

• Draw Schedule: Funds are released according to a predetermined draw schedule aligned with construction milestones.
• Manage Your Cash Flow: Only borrow what you need when you need it, preventing unnecessary debt.
• Adjustable Financing: Depending on the contractor’s progress, adjust your loan to fit the construction timeline.

Interest-Only Payments

During the construction phase, many construction loans allow for interest-only payments, helping to keep initial costs lower.

• Lower Initial Payments: Focus on building without the burden of full mortgage payments.
• Financial Flexibility: Use the savings from interest-only payments for other project-related expenses.
• Transition to Full Payments: Switch to regular repayments once the construction is completed and the loan is converted.