Unreal Fish Art Blog

How Do Construction Mortgages Get Paid Out?

Once a construction project is completed, the total costs of the construction process that get advanced by construction mortgages, gets rolled into what lenders refer to as a take out mortgage, or long term property mortgage.

The take out mortgage will only advance funds once construction has been completed, all final building approvals are in place, and the construction lien period has passed without any outstanding claims against the project.

The longer term financing can have an amortization of 15 to 25 years in commercial situations, and up to 40 years for residential properties, with rates that are typically significant lower than the higher risk construction financing costs.