Construction to Permanent Financing

Construction-to-Permanent Financing Solutions from Merrill Lynch

Building or renovating a home may be one of the largest projects you will ever undertake. Our Construction-to-Permanent Financing offers a smooth transition from construction to permanent financing with only one application and one closing—saving you both time and money.

In most cases, custom-built home construction takes from 12 to 18 months. During the construction phase, you will receive disbursements of funds to pay your builder for labor and material costs. Each month you will be required to pay only the accrued interest on the outstanding balance.1 Once your home is complete, your loan automatically converts to the permanent mortgage you selected during the application process.

Construction-to-Permanent Financing can make each phase a little easier

* Financing for new home construction and major renovations is from $100,000 to $3 million.2

* It is available for owner-occupied primary residences and qualified second homes.

* You pay only one set of closing costs.

* There are no prepayment penalties.

The Construction Phase features:

* Eighteen-month construction period, upon approval by Merrill Lynch, may be extended up to an additional six months with an interest rate margin increase

* Interest-only payments at the prime rate plus a margin, based on utilization1

The Permanent Phase mortgage options include:

* PrimeFirst® Adjustable-Rate mortgage

* Select Term Adjustable-Rate mortgages

* Select Fixed-Rate mortgages

* 100% financing available

What you should know

* Land must be owned by borrower or included in the construction sales contract,

* The borrower must have selected a builder acceptable to Merrill Lynch.

* Final plans and specifications must be approved by both the builder and borrower, and are subject to Merrill Lynch review.

* You cannot act as your own project manager.

* The borrower must have selected a builder acceptable to Merrill Lynch.

* Final plans and specifications must be approved by both the builder and the borrower—and are subject to Merrill Lynch review.

* You cannot act as your own project manager.

1The construction period requires interest-only payments based on the Prime Rate as quoted in The Wall Street Journal, plus a margin. Six-month extension permitted with interest rate margin increase and lender approval.

This is an “interest-only” mortgage that allows you to pay only the interest on the money you borrow for a certain number of years. If you only pay the amount of interest that’s due, once the interest-only period ends, you will still owe the original amount you borrowed and your monthly payment will increase—even if interest rates stay the same—because you must pay back the principal as well as interest. You should ask what the payments on your loan will be after the end of the interest only period. If you are considering an adjustable-rate mortgage, ask about what your payments can be if interest rates increase.

2 Loan amounts over $3 million may be available on a case-by-case basis to qualified applicants.