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Construction Loans

The basics of construction loans

Construction loans are typically short term with a maximum of one year, and have variable rates that move up and down with the prime rate. The rates on this type of loan are higher than rates on permanent mortgage loans. To gain approval, the lender will need to see a construction timetable, detailed plans and a realistic budget, sometimes called the “story” behind the loan. We offer competitive variable rates during the construction term that easily transition into a fixed rate mortgage upon completion.

Once approved, the borrower will be put on a bank-draft, or draw, schedule that follows the project’s construction stages and will typically be expected to make only interest payments during construction. Our construction program will require that a draw schedule be implemented and carried out through a series of inspections, like foundation and framing; just to name a few.


Construction-to-permanent arrangement

Upon completion, which is defined by a certificate-of-completion by the construction company or engineer and full payment of contractors (and often their signatures on lien releases), we will roll the construction loan into a fixed rate mortgage.

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