This piece of writing is intended to provide an overview on Construction Finance.
Definition
Construction finance is basically a short-term loan used to finance the construction of a home or another real estate project. A builder or homebuyer seeks a construction loan in order to cover the expense of the construction project before obtaining long-term funding. The construction loans usually come with higher interest rates than traditional mortgage loans.
If you are seeking construction finance, you can approach an alternative lender like Global Capital Finance to get loan at competitive interest rates.
Once construction project is completed, you can either refinance the construction loan into a permanent mortgage or get a new loan (end loan) to pay off the construction loan.
Here are some benefits of construction finance
Flexible Financial Solutions
Construction finance solutions that alternative lenders provide are flexible and intended to be altered according to the factors like specific accounting, cash flow needs, and tax.
Strategic Expense Planning
Ensuring consistent flow of cash and budgeting is another benefit of construction financing.
Capital Preservation
The type of financing employed (lease vs. loan) can help you alleviate or lessen the uncertainty of investing in an asset that might not yield desired return.
Gives You Greater Control
Construction finance gives you greater control over the payments to be made to the builder if you are constructing a property as a premises or investment.
Better Cash Flow
A construction company would have facilities to lend against outstanding progress payment invoice which helps improve business’s cash flow position.
There are a number of benefits beyond these above-mentioned that you can realize with construction finance from alternative lender like Global Capital Commercial.
An alternative lender may provide you different options of generating a loan like:
Full Doc Development Finance
This type of facility is generally sourced through major financial institutions like banks, super funds to require pre-sales (or pre-leases) and current up-to-date financials. The facility offers cheapest form of construction finance in terms of interest rates.
You can approach an alternative lender to know more about full doc development finance.
Stretched Senior Construction Finance
This facility ensures a higher LVR than typical lenders on senior debt basis without employing a mezzanine facility.
Low Doc and No Pre-sale Development Finance
Through this facility, a loan is sourced through private investors/lenders, as they do not require pre-sales or financials while providing more flexible lending criteria.
Approach an alternative lender to understand the nitty-gritty and seek a construction finance.
