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Are you aware of the contingency hold-back per draw? On construction loans, lenders will fund in increments and there is a mandatory 10% construction contingency hold-back on every draw which is given back to the borrower after 60 days. Some lenders may make an exception not to hold back this amount but according to the Act – they should and majority does.

Borrowers need to know on every draw there’s the contingency hold-back and there’s an inspection fee each time a draw is required in addition to possible legal cost.

At CMFG – we would advance directly to the borrower to avoid additional legal cost after closing on each draw request. We do not have set draws either.

Explaining the overall cost of borrowing from the onset and setting the expectations would save you a lot of time and hassle plus your client will not be surprised or upset along the way.


Listed below are typical information required for preliminary review and to have an overall understanding of the project/ borrower and exit etc.

  1. Where is the property?
  2. Budget
  3. Drawings
  4. Who is the GC/ experience in building similar asset
  5. Timeline for completion
  6. End use of property
  7. As is and end value – do you have an appraisal ?
  8. When did you purchase and what was the purchase price?
  9. Annual property tax amount and is it up to date?
  10. Current mortgage balance , who is the lender, maturity date and is it up to date? a current mortgage statement will help even if it’s old.
  11. Loan amount request
  12. What are you looking to build – how many sq ft, bedrooms, washrooms, storeys, garages?
  13. Will there be a finished basement ?
  14. Income details- approx annual income / sources of income for all borrowers.
  15. If the property is under a company’s name – provide the articles of incorporation.
  16. If self employed – provide recent 6 month business bank statements
  17. Are you up to date with CRA ? Do you owe any income tax? If so, how much?
  18. Do you own any other properties ? If so have the borrower complete your DCR
  19. Recent equifax report for all borrowers – you can pull it online at however the broker or lender will pull credit if proceeding.  At this stage it is best that you pull it online as it does not affect your credit score.   If you cannot then with your consent the broker or lender will.
  20. Where will you reside once construction commence ?
  21. Do you have Permits or what is the city position ?
  22. How much did you spend to date for soft cost and what has been done?

Hope this is helpful for agents and the general public who need to understand what is required at the initial stage when inquiring about a residential construction loan.


 CONTACT or call 6474949885 ext. 107