What is a construction loan?
A construction loan is a short-term loan that provides the funds required to build residential property, commercial property, or new developments. As a business financing solution, a construction loan is a short-term solution providing funds for the completion of your project.
Construction loans typically are one year in duration but can be extended if necessary. During this time, the property must be built, and a certificate of occupancy should be issued.
Where should I get a construction loan?
Webster Capital
Big Banks
When deciding where to get a construction loan, it is vital to consider the experience of your lender and the time it will take to get funded and start working on your project. Choosing a partner with experience is your best choice when getting a construction loan. While most big banks won't even provide this type of funding, those that do have large amounts of capital at their disposal for attractively priced rates-- but beware-- working with them can be a nightmare! Choosing a reliable and experienced hard money private lender for your construction loan can make all the difference.
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No credit checks ​
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Fast approvals
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Asset based
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No application ,appraisal,or draw fees
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Reliable and easy disbursements to minimize building delays
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Thorough understanding of construction and development
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All decisions made in house
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Flexible interpretation of draw schedules
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Hassling financial investigation and credit checks
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Only available to highly qualified borrowers
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Long approval process
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Hefty fees for draws and appraisals
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Reliance on third parties for appraisals and draw decisions
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Little to no understanding of your unique needs
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Rigid adherence to draw schedules and milestones
Choosing the right lender for your construction loan is vital to the success of your project. At Webster Capital, we come from a background in construction and development. This gives us the experience and perspective that traditional lenders do not have.
How do construction loans work?
A construction loan can help you build a new home or finance your business operations. It usually has higher interest and shorter terms than traditional mortgages. Once approved, you’ll have to provide detailed plans and a realistic budget. Then payments will be made in stages as your project moves forward. Unlike a traditional loan, a construction loan is given out in stages, or draws, based on major construction milestones, for example, when the foundation is laid, or framing begins. With Webster Capital, the borrower is only responsible for paying interest on the total of funds outstanding on the construction loan rather than the total loan amount. This helps save money on carrying costs throughout the duration of the project.
What does a construction loan cover?
Some things a construction loan can be used to cover include:
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The cost of the land. (If you are looking to finance land alone, click here to learn more.)
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Contractor labor
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Building materials
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Permits
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Letters of Credit
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Renovations
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While items like home furnishings generally are not covered within a construction loan, permanent fixtures like appliances and landscaping can be included.
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Short term fix and flip loans can also be structured similarly to a construction loan to reduce your interest expense.
Getting started with a construction loan
If you are looking for a construction loan in Rochester, NY, Webster Capital is your best choice. Drawing from our years of experience in construction and development allows us to provide funding for deals that traditional lenders won't. Additionally, you can be confident knowing that your construction loan will be funded quickly and draw requests will be fulfilled at lightning speed! If you are building a custom home or commercial project and are interested in finding out more about construction loans, contact us today or apply online.