Thursday, December 1, 2022



Build a house or renovate a commercial building – in both cases, you will need financing. Construction loans are present in various shapes and sizes, but the friendly team in SouthStar Bank can help you sort out and find the perfect for you!

Contact our team when you are ready to speak about a construction loan.

Commercial construction loans

Soil development loans

Soil development loans are a type of agriculture loan that can be used to improve the soil and increase crop production.

This is an important topic for farmers and those looking to pursue farming, especially if they want to start their own farm or grow their existing business.

Soil development loans offer many benefits, such as

  • improving sustainability by restoring land
  • reducing erosion and
  • increasing water retention capacity in the soil

They also help with nutrient management which helps plants become healthier.

In addition, these types of loans may have lower interest rates than other agricultural loans because it is less risky for lenders since the money is being spent on improving the land rather than being spent on plant growth or livestock care. 

Loan development land is used to make your package ready. This includes money spent on dividing and distributing land, or installation of gutters, water, strength and other needs.

Loan Acquisition & Development

Loans acquisition and development are used to increase the soil after being developed. This loan can include land purchase costs, and every increase that needs to be done on existing infrastructure or buildings.

In order to get a loan for your business, there are some major steps that you should take first in order to be successful: Know Your Business Plan – Before ever going in search of a lender, it is important that you have an understanding of how much money it will take from start up until when the company starts generating profit. This plan must include all operating costs such as labor costs, utilities expenses and equipment expenses. 

Temporary construction loans

Interim construction loans pay for labor and materials used. Usually valid for 18-36 months, and then resolved in a long-term mortgage afterwards. Construction loans are a type of loan that is designed to be repaid after the project has been completed.

This means that borrowers can borrow money. But, they will have to pay it back with interest when the construction is finished.

Temporary construction loans are often used for residential projects because they only last up to 18 months and do not require many details about your finances or credit history.

These smaller loans are perfect for people who need cash quickly and want to avoid debt, yet still get their project done in time. The application process takes just minutes online and approval decisions happen fast too! 

Housing construction loans

Stand-alone construction loans

In a stand-alone construction loan scenario, you issue two separate loans. The first cover payment for construction. The second is a mortgage, which can also be used to pay off construction loans. This loan sometimes has lower advances that can be useful for you to have many assets but not cash.

If you’re looking for a way to finance your next home improvement project, then you may want to consider a stand-alone construction loan.

  • These loans offer the flexibility of financing your project as well as the ability to borrow up to $750,000 with no mortgage needed.
  • This is perfect for those who are unable or unwilling to take out a traditional mortgage and can help them save money on interest rates as well as increase their monthly cash flow. 

Construction-to-permanent loan

Do you need a construction loan? The best way to get started is by talking to a lender. They can help you determine if it’s the right option for your project and set up the application process. If you have any questions, they are always available and willing to answer them.

Construction loans allow borrowers to finance both land and building costs with one low interest rate while minimizing equity requirements during the construction phase.

Construction-to-permanent loans offer single monthly payments that include both principal and interest over an extended term of five years or more until the home is sold or refinanced at which time all remaining debt becomes due in full (no balloon).

With a credit-to-permanent loan, you will initially borrow money for construction. This is a short-term credit line that usually comes out in periodic withdrawals throughout the development process.

After the construction is complete, a construction loan is then financed back to the mortgage of the house.

The construction of the construction loan transition becomes a permanent mortgage only after the contractor has finished building a house

The house needs to be assessed to determine whether the value of the house will accommodate mortgage values. In this scenario, two loans rolled into one final loan. This means there are fewer closing costs.

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Habib Kazi is a General Blogger & writer who has been an expert in the technology field for a few years. He has written several useful articles which have provided exciting and knowledgeable information on Finance, Business, Construction, Tech, Travel, and Sports.