Moving from construction loan to permanent loan

Conditions to meet

• Work completed and accepted
• The final location certificate
• Releases from suppliers and subcontractors
• Occupancy, if the lender requires it
• Signed leases, for a rental building

Preparing the switch early

Apply for the permanent loan before work ends. The switch then happens without a gap.

Why prepare the next step early

A construction loan costs more. Every month of delay is paid at the higher rate.

A request filed two months before completion avoids that cost.

What changes in the review

The lender stops looking at the budget. They look at income and final value.

A leased building finances better than one finished but empty.

Timing of the releases

Suppliers have a legal period to register a claim.

Leasing before the work ends

Leases signed in advance markedly improve the permanent loan terms.

Start leasing as soon as the occupancy date is known.

A building eighty percent leased changes the review.

Comparing lenders at this point

The permanent loan need not come from the same lender.

This is the right moment to compare market terms.

The construction loan is simply repaid with the new loan.