Funds set aside from loan proceeds at closing to cover interest payments during the construction or lease-up period when a property is not yet generating sufficient income. An interest reserve reduces
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Funds set aside from loan proceeds at closing to cover interest payments during the construction or lease-up period when a property is not yet generating sufficient income. An interest reserve reduces the borrower's out-of-pocket carrying costs during stabilization and is commonly structured into Canadian construction and value-add commercial loans.
← Mortgage & Real Estate Glossary 2026 · Editorial standards
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