Jul 03, 2025

How Builders Capital Powers Residential Construction with Tailored Short-Term Financing

At Builders Capital, our operational model is built on a focused, disciplined approach to mortgage lending. We specialize in providing short-term, course-of-construction financing to residential builders working on wood-frame projects across Western Canada and Nova Scotia. By maintaining this niche focus, we reduce overall portfolio risk and enhance potential returns.

Purpose-Driven Lending

Our mortgages are custom-built for residential builders—structured specifically to meet the practical, real-world needs of construction timelines, draw schedules, and property sales. This deep alignment with our clients gives Builders Capital a significant edge in the construction financing space.

Expert Management

Our mortgage portfolio and day-to-day operations are overseen by Builders Capital Management Corp., under a formal management agreement. This seasoned team provides not only the staffing and infrastructure needed to run the business, but also brings decades of experience in residential construction and real estate.

From underwriting to enforcement, the manager ensures prudent decisions are made throughout the lifecycle of every loan. If a project defaults or needs to be completed due to enforcement proceedings, the manager has the expertise to finish it cost-effectively and on time—preserving the investment and capital value for our shareholders.

Rigorous Underwriting Standards

Every mortgage investment undergoes a multi-stage review process:

• Initial screening based on our Asset Allocation Model (AAM), which considers geography, sector, borrower profile, term, and loan-to-value ratios.
• Comprehensive due diligence, including re-costing the project as if we were the builder and conducting a full value assessment of the finished property.
• A final lending decision based solely on projects we believe are both economically sound and within our capacity to complete and market, if needed.

Flexible, Revolving Loan Structures

Builders Capital issues promissory notes secured by collateral mortgages, typically with terms of one year or less. Many loans are revolving in nature, allowing builders to draw, repay, and redraw funds as projects progress.

Some loans are repaid upon the sale or refinancing of the property. Others revolve, where completed projects reduce loan balances—sometimes to zero—and new projects are added under the same mortgage. Renewals are granted when projects are still progressing and the security remains sound, though additional collateral or payments may sometimes be required.

Importantly, all mortgages are demand loans, giving us the flexibility to call them if needed—an important risk management tool in an evolving market.

Conservative Lending, Strong Oversight

We target an initial loan-to-value (LTV) ratio of no more than 75%, though real-world factors—like accrued interest or shifting market values—can sometimes cause this to fluctuate. Regardless, our underwriting is conservative, our due diligence is extensive, and our structure is designed to protect capital while enabling builders to bring high-quality homes to market.

By staying specialized, disciplined, and responsive, Builders Capital remains a trusted source of financing for Canada’s residential construction sector—and a stable, risk-managed investment for our shareholders.