Brokers complain about the difficulty of working with new construction mortgages, but one of the leading players in that space says those who dedicate the time to understand the market will thrive.
“Generally, we don’t have any problem with those deals; the biggest problem is brokers not taking the time to understand them,” John Meredith, president and CEO of the brokerage CityCan Financial, told MortgageBrokerNews.ca.
Meredith estimates new construction deals comprise 25% of his business. He usually completes 4-5 of those files a month, which account for $6-10 million in funded mortgages.
And while many brokers say there are few options for new construction clients, Meredith says it’s all about working with private lenders and understanding the process.
“The big keys are getting the proper costs for building construction, dealing with the right appraisers, and understanding draws,” he said, noting that draws are the phases in which lenders release money based on work-in-place (completed work).
Another key is working with organized clients.
“We try to avoid the merry-go-‘round and get all the information up front,” Meredith said.
Experience is also paramount.
“If you give the deal to an inexperienced agent it’s not going to go through,” Meredith said.
Speaking to MortgageBrokerNews.ca recently, broker Steve Bucher noted the lack of brokers currently operating in the space.
“I think it’s going to be a lost art,” Bucher said. “Brokers who do these deals should be congratulated.”