Unless the land on which a construction project is built is paid for in cash with no security registered against it, a construction loan will be secured by a second mortgage registered against the subject property.

There are even cases where the construction loan can even be registered as a third mortgage, depending on the amount of equity that exists in the property.  More mortgage registrations also mean more risk to the later lenders, so a third mortgage is not likely unless there is significant room for error in the remaining equity.

The the first and second mortgage balances typicaly will not exceed 75% of the value of the property.