So I spoke to a different mortgage broker today. Here is what he had to say:
Cottages fall into a different class than a regular single family home owner occupied, cottages are a market called "vacation homes or secondary homes" and given their remote locations, the industry in general are very conservative in loan to values.
A typical structure for this type of development is 50% LTV of the finished value, which is being advanced as per different stages of the project. Usually is foundation, Structure, Interior and Finishes. And usually as you said, you need cash on hand in order to get the contractors started, then they deliver the work and then they an appraiser comes to review the work and based on progress you get the respective amount of money corresponding to the phase.
Please note that you must own at least 70-80% of the land (lot), so the lender can advance something based on the construction permits granted and the plans approved by municipality and a budge prepared by your contractor.
Please note that construction loans are usually 10-14% per yr. (12% in average) simple interest fully open mortgages, with 2% lender fee and 2% broker fee.
Not so great news, but it's still doable. Just need to figure out where to get more money.
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