A construction to permanent loan (also called CPL loan) is one loan that allows you to finance the construction of the house and then converts to a permanent mortgage loan. It functions as a line of credit to pay for the construction costs at each stage of the building process, and you pay interest on the amount you have drawn out. When the house has been completed and you have your occupancy permit, the loan switches to a monthly mortgage payment due at set intervals.
The Cons of a CPL loan
- The interest rate may be a little higher than if you first take out a construction loan and then a second traditional mortgage on the house.
The Pros of a CPL loan
- You can lock in an interest rate before you start building. If you choose to do a construction loan and then a traditional mortgage, you will have to wait until the house has been completed before you can lock in an interest rate on the mortgage.
- There is only one closing cost, usually before you start building.
- All State Homes has CPL loans available for as little as 5% down.
To qualify for a CPL loan, you will need to work with a qualified builder. Because banks and lenders don’t have a completed home for collateral, you will be required to submit details about the size of the home, the materials used to build the home, and the contractors and subcontractors who will be doing the work.
All State Homes works with many banks and lenders and can walk you through the financing process, whether you choose a CPL loan or the option to do a construction loan and then a traditional mortgage. Contact Us to discuss your options.