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Construction draw interest reserve

Estimate the interest carried during the build so you can plan an interest reserve. Then talk to us about your real options.

Your numbers

Interest accrues only on funds drawn, so the average balance sits below the full loan.

A rate to estimate with. We will confirm your actual options.
Draws start low and build up, so the average outstanding is well below the full amount.
Estimated interest during construction
$0
Average outstanding balance$0
Monthly interest at full draw$0
Project length--
Estimated total interest (suggested reserve)$0
Talk to us

For illustration only and not an offer of financing or a rate quote. Actual interest depends on the real draw schedule and the timing of each advance, and lenders often require an interest reserve to be funded as part of the loan. This is a planning estimate only. Speak with us for figures specific to you. TMG HarbourTown Mortgage Inc., Licence #3000145.

What these numbers mean

Plain-language definitions and the typical ranges, so you can play with the inputs with confidence.

Total construction loan
The full approved facility for the build. You rarely owe interest on all of it at once, because funds are advanced in stages as the work is verified.
Typical: drawn in stages tied to construction progress and inspections
Interest rate
The annual rate charged on the outstanding balance. Construction and bridge financing usually price above a completed, income-producing mortgage because of the build risk.
Typical: construction rates run above term commercial rates
Project length (months)
How long the build runs before completion or take-out financing. Interest accrues for the whole period the loan is outstanding, so timeline slippage adds carry.
Typical: small to mid builds often run 9 to 18 months
Average utilization over the build
The share of the loan outstanding on average across the project. Draws start small and grow, so the average balance sits well below the full amount, which is why interest is lower than a full-balance estimate.
Typical: a roughly even draw schedule averages near 50 percent
Interest reserve
Money set aside, often inside the loan itself, to pay the interest during the build before the project earns income. Lenders commonly require it to be funded up front so payments are covered.
Typical: lenders size the reserve to the estimated construction-period interest
These are general ranges, not your numbers. The right figure depends on your situation, the property, and the lender. Talk to us and we will pin it down.

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