Developable Land Mortgages

At O2G we’ve supported countless clients throughout every phase of the land development process. Over the years, we’ve honed our knowledge of best practices for financing these large and often complex projects. After all, no matter what structure you create for a development, the type of financing chosen will always be key to the project’s success.

Ways to establish your development land mortgages

Our agents work hard to provide you with the highest level of customer service and get you approved for a commercial or industrial mortgage loan easily and hassle-free.

  •   Form relationship with a variety of lenders so that you have multiple options in choosing the right structure for your development

  • Establish trust and communication with the Lender.
  • Safeguard your project from economic downturn, unpredictable interest rates and implement a strong project strategy.
  • We will help you ask the right set of questions that you need to consider:

How To Qualify?

  •  Strategy of the project which should include market analysis and risk assessment

  •  Understand Risks:
    • Entitlement risk - Can you obtain proper zoning and permits?
    • Construction risk - What happens if estimated costs change or you encounter delivery delays? Do you have a financing strategy in place to bear unexpected costs?
    • Capital market risk - A change in interest rates could affect construction costs, as well as hinder the purchasing power of your potential buyers.
    • Pricing risk - Unanticipated competition may enter the market prior to completion, resulting in oversupply of product.
    • Political risk - A change in government or local/foreign political factors could influence a range of issues.

    Your project strategy should be established early on to decide the following:

  • Loan-to-Value (LTV) ratio and interest rates
    • maximize your Loan-to-Value ratio (LTV) and stretch equity as far as possible, even though they may bear substantial financial cost. For example, this strategy may require a second mortgage on the property at high interest rates. While this might reduce the profit of the project, the actual returns may be greater as the money used to build the property didn’t belong to the developers.
    • Or prefer to avoid debt and put more equity to work while maximizing profit. Borrowers with lower LTVs will qualify for more favourable financing rates than those with higher LTVs as lenders consider the LTV ratio to be indicative of a lower risk.
  • Type of Loans
    • O2G mortgage consultant will advise you what of loans may be needed during the different phases of your project. For example, during the servicing and development stages, construction loans are often the best option. During the stabilization process, a more permanent loan may make more sense.
  • Type of Debt – Guaranteed or non-recourse debt
    • If as a developer you don’t have a financial track record, the lender may require the principals or owners of your developers entity to guarantee the debt. This provides the lender with a group of individuals from whom the loan can be recovered in the event of default. If a guarantee is not required by the lender and the property is the only means of recovery, the loan is called a non-recourse loan.

When you're ready to get started, a O2G Mortgage Agent can help guide you through the process.