What Is a Construction Loan from a Private Lender in Ontario?

Stonefield Capital offers private construction loans in Ontario as short-term, equity-based financing that advances funds in draws as each build stage is completed.

What Is a Private Construction Loan?

A private construction loan is a registered mortgage that releases capital in scheduled draws rather than in a single lump sum. Each draw is tied to a verified completion milestone: foundation, framing, lock-up, drywall, and so on. Interest accrues only on the amount drawn, not on the full committed amount. The governing rule is that the total of all draws must stay within the approved loan-to-value limit against the property as it stands.

This differs from a standard term mortgage, which is fully advanced on day one and charges interest on the entire balance from the outset.

Why Do Builders and Owners Turn to a Private Lender?

Bank construction financing requires a detailed cost-to-complete package, satisfactory pre-sales or rental projections, and a borrower credit profile that clears automated underwriting. Many legitimate projects fall short on one of those criteria, not because the build is unsound, but because the borrower's income documentation is incomplete or the project type (custom home, laneway suite, small infill) sits outside a bank's product matrix.

Private lenders underwrite on equity and exit, not income ratios alone. A clear exit (refinance to a conventional mortgage at completion, or sale of the finished property) is the foundation of every private construction approval.

How Does Stonefield Capital Structure Construction Draws?

Stonefield Capital uses a fixed-term, multiple-draw private mortgage (typically three to twelve months), registered directly on title. Funds are released in stages as construction milestones are confirmed. Interest is charged only on amounts drawn; the unadvanced portion carries no interest cost.

This is not a HELOC and is not revolving: once a draw is taken, that portion cannot be redrawn. The total number and size of draws are agreed at commitment and reflected in the registered charge.

What Does Stonefield Look at When Underwriting?

• Current equity or land value: What is the property worth today, before any additional construction?
• As-completed value: What comparable sales support the finished value used to size the loan?
• Exit strategy: Refinance to an A or B lender at completion, or an executed sale agreement.
• Cost-to-complete reasonableness: A summary budget confirming the loan is sufficient to finish the project.
• Borrower background: Notices of Assessment are always requested to confirm no material CRA arrears. Additional income documents may be requested for servicing and exit confirmation; a thin income file does not automatically kill a deal.

Are Appraisals Required?

In most cases Stonefield Capital runs its own comparable-sales analysis rather than ordering a formal appraisal. This saves the borrower a fee and typically several days of wait time. When the project type or property location warrants a formal report, that requirement is flagged in the initial response — never at commitment or at the last minute.

How Quickly Can a Construction Loan Fund?

Funding in as little as 48 hours is achievable when legal counsel is ready to proceed. The bottleneck in construction closings is almost always legal preparation — title searches, draw schedules drafted into the mortgage document, and any required title insurance endorsements, not Stonefield's underwriting turnaround. Submitting a complete package on day one shortens the timeline significantly.

What Property Types Are Eligible?

• Custom residential new builds on freehold land in Ontario
• Major renovation or addition projects with construction risk
• Infill and laneway suite construction
• Small multi-residential (typically up to six units)
• Tear-down and rebuild scenarios

For non-standard collateral such as cottage-country builds or properties in smaller markets, underwriting focuses on local comparable sales and a credible exit, not on projected rental income or occupancy assumptions.

What Does Private Construction Financing Cost?

Private construction rates are priced by loan-to-value, loan position (first or second mortgage), property type, and project complexity. Current rate ranges are published at stonefieldcapital.ca/private-mortgage-rates. Lender and broker fees apply and are disclosed at the term-sheet stage. Because interest accrues only on drawn amounts, the all-in carrying cost through a phased build is typically lower than the face rate suggests.

How Do Brokers Submit a Construction File?

1. Send the deal summary — address, land value or purchase price, total project budget, as-completed value estimate, and borrower background.
2. Attach the construction budget — even a one-page line-item summary is enough to open the file.
3. Confirm the exit — name the takeout lender category (A, B, or private renewal) or attach a sale agreement if applicable.
4. Receive a term sheet — Stonefield responds with draw schedule, rate, and conditions, typically the same business day for complete submissions.

Stonefield Capital is a licensed mortgage brokerage in Ontario (FSRA #13722). Broker co-operation is standard; referral and compensation terms are set out in the broker agreement.

What Happens If the Build Runs Over Budget or Time?

Overruns and delays are common in construction. If a project needs additional time, a term extension may be available; conditions and any adjustment to pricing are assessed at the time of the request. If additional funds are needed beyond the original commitment, a revised loan analysis is required — the existing draw facility cannot simply be increased without a new underwrite. Planning for contingency at the outset is the most reliable risk management tool.

Frequently Asked Questions

Does Stonefield Capital fund construction loans on raw land with no existing structure?

Stonefield Capital can consider construction loans where the collateral is serviced land in Ontario, provided there is sufficient equity in the land value to support the initial advance and the exit strategy is clearly defined. Raw agricultural land or unserviced rural lots without a credible takeout plan are unlikely to qualify. Submitting current land comparables and a builder contract strengthens the file significantly.

Can a borrower with bruised credit get a private construction loan in Ontario?

Yes, in most cases. Stonefield Capital underwrites private construction loans primarily on equity and exit strategy rather than credit score. There is no published minimum credit score requirement. Notices of Assessment are always reviewed to confirm no significant CRA arrears. A borrower whose credit issues stem from past events (divorce, illness, business difficulty) can often qualify if the land equity and exit are solid.

How many draws can be structured into a Stonefield construction mortgage?

The number and size of draws are agreed at the commitment stage and built into the registered mortgage document. Typical residential builds use three to five draw stages tied to verified construction milestones. More complex projects can accommodate additional draws. Because this is a fixed multiple-draw mortgage (not a revolving line), each draw is advanced once; amounts cannot be re-borrowed after being taken.

What is the maximum loan-to-value for a private construction loan in Ontario?

Stonefield Capital does not publish a single fixed LTV cap, because construction loan sizing depends on land value, as-completed value, project complexity, and loan position. Pricing and advance limits are assessed deal-by-deal. Current rate and LTV guidance is published at stonefieldcapital.ca/private-mortgage-rates. Where requested advances exceed what a single property supports, cross-collateralizing additional Ontario real estate is a standard remedy.

Is a formal appraisal always required for a private construction loan?

Not always. In most cases Stonefield Capital conducts its own comparable-sales analysis, which saves the borrower an appraisal fee and several days of processing time. A formal appraisal is required for certain project types or locations, and that requirement is identified in the initial response to a broker's submission — never introduced at the commitment or funding stage, which is when it causes the most disruption to a deal.