Construction Finance
Construction finance is a specialized form of funding designed to cover the costs associated with building or renovating residential and commercial properties. Unlike traditional mortgages, which are based on the property’s current value, construction loans are typically short-term and disbursed in stages as the project progresses.
At Pennyworth Finance – we help Building your future with the right foundation. Secure your construction project with reliable finance
Key Features of Construction Finance:
These loans usually span the construction period, often 3 months to 12 months or longer
Funds are released in predetermined installments, known as “draw downs,” corresponding to specific milestones in the construction process.
Borrowers often make interest-only payments during construction or fully capitalized interest for the term of the loan or part thereof, based on the amount disbursed to date.
Types of Construction Loans:
-
Construction-to-Permanent Loans: These combine financing for construction and the subsequent mortgage into a single loan, simplifying the process for borrowers.
-
Stand-Alone Construction Loans: “Construction-only” loans, cover solely the construction phase, requiring the borrower to obtain a separate mortgage upon completion.
Considerations for Borrowers:
-
Detailed Project Plan: Lenders require comprehensive construction plans, budgets, and timelines to assess the project’s feasibility.
-
Qualified Builder Requirement: Engaging a licensed and experienced builder is often mandatory to secure financing.
-
Higher Interest Rates: Due to the increased risk, construction loans may have higher interest rates than traditional mortgages.
At Pennyworth Finance, we offer tailored construction finance solutions to meet the unique needs of your building projects. Our expertise ensures a seamless funding process, allowing you to focus on bringing your vision to life.