Impact of COVID on Getting Construction Loans in Ontario

Construction projects are pretty standard in many cities worldwide, and Ontario has not been left out. Thanks to the availability of ready construction loans, building companies and investors have adequate opportunities to venture into construction projects of their choice.
However, with the recent economic crisis, occasioned by COVID 19, a lot of change has been reported in the construction sector.
Are you looking to get a loan for your construction project? We have compiled a few things that we think will benefit you in your journey to secure construction loans in Ontario.

Construction loans are short-term construction financing loans tailored to cover a new home or real estate construction.
Also, construction loans are used for refurbishing an existing building or home. Payments are made in installments called “draws.” Each draw covers a specific phase of the construction.
The flexible terms offered are worth engaging in construction in Ontario. 

Typically, with any loan, income minimums and credit score are the utmost preference in obtaining one. Other qualifications needed alongside your loan credibility in Ontario construction are articulated below:

• A down payment of about 20-25% is required. 
• Details of your plan for the construction project. This includes details on the speculated time of the project and projections on costs. Your lender will also require an inventory of materials to be used, contractors, and suppliers.
• Your choice of builder to execute the project. It is wise to choose an experienced and one with an appealing reputation.
• Assessment of property value. Having details of the complete construction project’s value grants an upper hand in the construction loan financing.

The ongoing COVID crisis has seen Ontario construction facing the greatest battle to balance loan issuance economics. This has resulted in the industry having to deal with a series of challenges. Delivery and performance of construction loans has suffered greatly.

Below is a consolidated list that wraps up the challenges:

• The construction pace has slowed down– Many companies are working towards minimizing the number of employees and contractors. This is a major step to meet the standards brought about by COVID concerning social distancing.
• Great impact on interest rates and mortgages for returning and new applicants– Most financial institutions have declared to increase their rates.

This is also accompanied by great attention being imposed on applicants than never before.

• Rise in default rates– COVID has resulted in high levels of unemployment and economic losses. This uncertain situation has resulted in a deferral of mortgages and loans by companies and individual builders. This has resulted in massive losses to the construction loan lenders.
• Delayed progress in existing and new constructions– With the potential implications projected by the crisis, there have been many delays. To a different extent, some projects have even come to a stand-still.

Are you looking for a source of funding to help your business grow? Simple Lend has financial packages that are tailored to help meet your construction needs. They offer a low rates and flexible terms, have a simple application process, and issue loans of up to $2,000,000. Their rates are the best in all of Canada. So, go ahead, give them a call today!

Find Final Verdict

Ontario construction has experienced indefinite changes brought about by the COVID crisis. There have also been impacts on construction loans. However, recent measures have emerged on how to operate and move on despite the recent encounters.