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Commercial Construction Mortgages

Finance property development or buildings for your own use or resale

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Commercial Construction Mortgage Benefits

  • Finance buildings for your use or resale
  • Finance property development
  • Permanent mortgages from $100,000 to $5,000,000
  • Up to 2 years with up to 10-year permanent period
  • Interest only payments during construction
  • Up to 75% loan-to-value*

*Based on rules set by NCUA.

Commercial Construction Mortgages

These loans can help you finance construction of a building for your own use. In addition, they can help you finance development of a property for resale if you have a strong and successful history of property development and a solid personal financial condition.

DCU's Commercial Construction Mortgages can be used for business purposes including . . .

  • Construction of a new building
  • Construction of multi-tenanted buildings including retail, professional, residential, and industrial
  • Additions and/or renovations
  • Construction of one to four family homes for resale
  • Condominium development
  • Other development loans
  • Available in Massachusetts, New Hampshire, and Rhode Island

Commercial Construction Mortgage Features

  • Permanent mortgage with amounts from $100,000 to $5,000,000.
  • Business owners, investors, and experienced contractors are eligible to borrow.
  • All mortgages not granted in individual name(s) will require the guaranty of the principal(s). If a building owner is occupied, the business will also guaranty the loan.
  • Terms up to 2 years followed by up to a 10 year permanent period.
  • Interest only payments during construction.
  • Interest rate is based on the credit, loan-to-value, debt service coverage, and other credit related factors.* All loans will float at the Wall Street Prime Rate plus a spread.
  • Commercial Construction Mortgage advances will be based on a pre-approved schedule.
  • Collateral: first position on the property.
  • Up to 75% Loan-to-Value (of the value or cost, which ever is lower). All liens on the property including DCU's first mortgage and other secondary mortgages cannot exceed 75% loan-to-value per NCUA regulation.
  • Equity Injections: The owners must inject a minimum of 25% of the hard costs of the project plus the soft costs. In certain cases, additional collateral may be substituted for a portion of the cash injection requirement.

As with all financial institutions the borrower will pay all fees and expenses relating to the loan. Fees may include, but are not limited to, application fee, appraisal fee, environmental research fees, documentation fees, attorney fees, recording fees, inspection fees, release fees, and any other fees that are normal to this type of transaction. All fees and expenses will be estimated for you prior to closing.

Commercial Construction Mortgage Minimum Requirements

  • Businesses have to be in business for at least 18 months.
  • Contractors must have a minimum of 10 years of experience.
  • Property owner must be in Massachusetts, New Hampshire, or Rhode Island.
  • Personal Credit must be good to strong.

The rates, terms, and conditions above are guidelines and may not apply in certain situations. A DCU Representative will discuss any variations with you. Rates, terms, and conditions are subject to change without notice.

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Is a construction loan good for additions/renovations to homes?

I am currently renting but looking into putting an addition on to my fiancé's home.
Asked by: Mariclare
Commercial Construction Loans are available only for Developers, owners of investment property, or Business Owners in MA, NH, and RI. The purpose for this type of loan is for major improvements or development to owner/non-owner occupied properties, in order to convert it into an investment property. If your fiancé owns their own home, they may want to consider a Home Equity loan or line of credit for the home improvements or addition. This would allow them to borrow against the available equity to make the addition or renovation desired. The available equity would be determined by the home's value less the First Mortgage.
Answered by: DCU Staff
Date published: 2017-05-07
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An Easy Way To Apply Today

For all Commercial Construction Mortgages regardless of size call the Commercial Loan Department at 508.804.9188.

If you have any questions, please consult our Frequently Asked Questions page or, don't hesitate to call us.