Frequently Asked Questions
How long does the approvals process take?
Again, there is no standard answer. If a developer has all the information we need, Cobra Mortgage can fund the project in as little as two weeks. However, what we can guarantee is a quick expression of interest and a term sheet with conditions that need to be met within a week.
How much equity should I have in my project?
While there is no standard answer to this question, a good rule of thumb is 25% of the total cost of the project. However, every project and every borrower is different, and it usually depends on the amount of the developer’s liquid assets. A developer with liquidity can put minimum equity into a deal, knowing they have the cash reserves to inject additional capital if required. A smaller developer is better off not borrowing to the maximum loan-to-value ratio, leaving the lender flexibility to advance additional funds if required.
The smaller developer should also have a cash reserve available to fund expenses between draws, in order to avoid problems like builders liens if they can’t pay trades or contractors on time. Most project loans will have an interest reserve built in (and not advanced), to avoid draining the developer of working capital while the project is under development. However, the developer should still account for time overruns and funding interest payments. A fully developed cash flow, and use of cash projections, can highlight potential problems before they arise.
What information does Cobra Mortgage need me to provide?
A good starting list would include:
- Personal Net Worth Statements of the borrowers
- Most recent personal Notices of Assessment of the borrowers
- 3 years financial statements for all related corporations
- An appraisal of the project by an AIC-designated appraiser
- Any development and building permits
- A detailed construction budget and cash use projection
- A resume of the developer, indicating past experience
- Phase 1 Environmental, and Soils/Geo-Tech report
How much does Cobra Mortgage charge in fees?
Upon acceptance of a term sheet offering, we typically ask for a $2500 non-refundable payment to cover expenses. Cobra Mortgage charges a fee of 1% – 2% of the funds advanced, either capped into the loan amount or withheld from proceeds, depending on circumstances.