A tool exists to determine the financial obligation during the construction phase of a building project. This resource allows borrowers to estimate the amount of interest payable on a loan where only interest is due during the construction period. For example, if a borrower secures a construction loan at a specific interest rate, and the tool indicates a monthly interest payment of $1,500, the borrower knows that they will be responsible for payments of that amount each month until the construction is complete and the loan converts to a permanent mortgage.
The availability of such a resource allows for improved budget planning and financial forecasting during the construction phase. It provides clarity on the monthly financial commitment, enabling borrowers to allocate resources effectively and mitigate the risk of cost overruns. Understanding the interest-only payments allows for informed decision-making regarding the project’s financial viability and reduces the potential for unexpected financial strain. Historically, a manual calculation was required; however, the current accessibility of automated tools simplifies this process.