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Note that some lenders may require the certificate of occupancy, mentioned above, to apply for the mortgage. With each major construction milestone, the lender will typically send an appraiser to make sure everything is up to code before moving to the next phase. As opposed to one lump-sum payment with other loans, construction loans often provide financing in stages aligned with milestones in a construction timeline \u2014 typically, over a year. For example, the borrower may not have a home to use as collateral because the home hasn\u2019t been built yet. The interest is typically higher compared to other loans because the investment comes with a bit more risk for the lender. A construction loan is typically a short-term, high-interest mortgage that helps finance construction on a property, which could include the cost of the land, contractors, building materials and permits.<\/p>\n<\/p>\n