New Home Construction Loans for Investors/Contractors

Aug 05, 2022

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New Home Construction Loans for Investors/Contractors

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If you're an investor considering new home construction, you'll need to know about the different types of loans available to help finance your project. There are numerous loan options for new home construction and many benefits to working with an established contractor, but the key is to find the right financing for your particular situation. Here's a look at the greatest benefits of financing a new home construction loan with a mortgage broker:


Simple submission and approval process

Unlike some other types of financing, working with a mortgage broker like Maggie to obtain a new home construction loan for property investment is simple. The application and approval process is streamlined because we will have already gathered all of the necessary documentation from you. This makes it easy to get the loan you need without the hassle. You can obtain financing in just 30-45 days, pending receipt of the appraisal, permits, and plans, rather than waiting the 90-120 days banks typically take.

 

Want to know why using a mortgage broker can be more advantageous than working with a bank? Read our recent blog post here.


Make Interest-only payments only on the money that you’ve drawn

Rather than making full mortgage payments from the start, you can make smaller interest-only payments on just the money that you’ve drawn from your loan. This leaves more cash flow available to put back into your business. For most investors or contractors, this is a significant advantage, as it allows them to reinvest in their business rather than using all of their available cash to make mortgage payments, which can stifle efficiency throughout the construction, renovation, or rebuild process.


Interest Reserve Accounts are available

Have you ever heard of an interest reserve account? These accounts are available through some lenders and can be a great way to manage your finances during construction. With an interest reserve account, the lender will front you the interest payments due during the construction period, so you don’t have to worry about making those payments out of pocket. This can be a massive help in cash flow management, especially for investors who are tight on working capital.


Much better interest rates and terms than hard money

Compared to hard money, taking out a construction loan as an investor or contractor will give you much better interest rates and terms. Hard money is great in a pinch, but the high-interest rates and short repayment terms can make it difficult to actually make any progress on your project. With a construction loan through Maggie, you’ll get more favorable terms to help you complete your project without breaking the bank.


Easy to refinance at the end of the construction period

Once construction is complete, you can easily refinance your construction loan into a traditional mortgage. This will help you save money on interest over the long term and allow you to lock in a low rate for the life of your loan (of course, this depends on current rates, loan availability, market conditions, and so forth). Refinancing is easy to do with Maggie because we have a vast network of lenders that we work with. We’ll help you find the best option based on your needs and goals.

 

If you're an investor considering new home construction, financing your project with a mortgage broker has numerous benefits. The application and approval process is streamlined, you can make interest-only payments on the money you've drawn from your loan, and you can easily refinance at the end of the construction period. Contact Maggie today to learn more about new home construction loans and how they can help you finance your next project.

 

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