Over the past few months, we’ve been doing presentations at a number of local community groups (Regina Beta Sigma Phi Chapter, Rotary Club, Regina Green Drinks to name a few) as well as at our Information Centre. We always get several insightful questions at these presentations. Sometimes the questions require a more involved answer and the blog provides a good medium for a broader depth of exploration.
We’ve covered frequently asked questions with respect to design recently. Today we want to address a few of the more financially themed questions. Specifically:
- How is the project being financed?
- Can I get a mortgage?
Frequently Asked Question: Project Financing
Our community has established a partnership relationship with a local, well-respected developer in Fiorante Homes & Commercial. Consequently, there is no need for our community members to borrow money to secure the land. The land is already owned by the developer we are working with, and it is being held for us until such time as we are ready for construction (more on that in our next blog post).
Much of the necessary equity required to get construction loan funding will be provided by the developer, but a portion of it is being provided by the membership of Prairie Spruce Commons. As a community, we have agreed to make a deposit which has been negotiated with the developer, equal to 15% of the price we are paying for the land and building construction. Some of that deposit will go into escrow with the developer’s attorney, and some of it will be used to pay for soft costs, such as design fees.
That said, construction financing will be secured by Fiorante Homes & Commercial as they will undertake the construction as developer of the project. The developer will locate, negotiate and secure the construction financing from a local bank, likely from Conexus Credit Union. The developer will also sign and guarantee the construction loan, corporately and/or personally. Members of the Prairie Spruce community will not be required to guarantee the construction loan.
Frequently Asked Question: Mortgages
When the construction of the project is nearing completion, individual condominium units will each get proper appraisals, arranged by the take-out mortgage institution, as with any typical condo, to satisfy underwriting requirements. The ‘take-out mortgage’ is the final homeowner’s mortgage, and the mortgage lender will treat this like any other condo purchase. Thus, if a family qualifies for a home purchase, they will also qualify for a purchase at Prairie Spruce Commons.
As part of an early financial pre-qualification process, Prairie Spruce Commons has been working with the Conexus Credit Union to assess the viability of purchasing units for many of our interested home buyers. If you’re considering a purchase but are unsure whether you would qualify for a mortgage, we can help you setup a meeting with a Conexus Credit Union representative. Our willingness to work with Conexus on this matter also gives our developer-partner (Fiorante) the financial credibility of having solid buyers lined up from the construction lender’s perspective.
Should you have any other financially-related questions, don’t hesitate to ask. We are eager to address any questions you might have.