Are you a Self Employed or new Developer who is looking at the options
available for Financing up to $5 Million in any of the Capital Cities?
A broad summary below will assist in understanding the usual practices by
Lenders who operate in this space
There are available facilities for a maximum Lend up to 65% of
the estimated end value, including the proposed Land content,
with a Loan Term of up to 18 months.
Some Lenders will provide this facility where the Security is
Residential -low and medium density (eg. Villa, Town House,
Units and small Land Subdivisions
All will require that each Loan will be secured by a registered
first mortgage and Personal & Directors guarantees will apply,
and depending on the size of the Loan a percentage of Pre Sales may well
be required.
The Lender will engage a quantity surveyor to determine the
cost to complete the development, and to manage the construction
drawdowns throughout the progress of the works, with the quantity
Surveyor being instructed by the lender throughout this process.
The Lender will arrange a valuation of the security property (or properties ).
and the Valuer will be asked to value the property ( or properties) for
mortgage lending purposes both on an 'as is' basis and and an
'on completion' basis assuming the completion of the development in
accordance with the approved plans.
In addition the valuer will be asked to confirm that the property is
readily saleable within 6 months after completion of the development with
all costs associated with the valuation will normally be payable in advance by the borrower
Project risk fees may apply in certain circumstances
These facilities are available to Companies, Unit and Discretionary Trusts and
Director guarantees will apply in these instances
Builders 'All Risks' insurance will be required throughout construction with
Re-Instatement and replacement cover over all existing buildings and
for each building on completion and Home Warranty coverage
(if required under the relevant State Legislation will also be needed.
New developers may find this difficult to obtain depending on the previous construction
experience of the applicants and may needed the services of an Insurance Broker who
handles this type of Contract.
These loans are subject to satisfactory credit reports on the borrower/s
and or guarantor/s. Borrower/s with bad credit loans are under special condition or rather given a higher interest rates compared with borrower/s of good credit.
There are normally application fees applicable that vary between Lenders and
can often payable in two instalments, with the Third party Fees eg. Valuations,
Quantity Surveyors and Legal Fees all payable in advance by the borrower/s.
All loan and security documents will be prepared by solicitors appointed by the
Lender with all legal costs are payable by the borrower/s
Interest Rates are determined differently by each Lender depending on the
developers experience, the complexity and period of the Construction.
In summary it is important that advice is sought from professionals with experience
in this field before embarking on any new venture, be they Lawyers, Conveyancers,
Insurance and also Finance Brokers to avoid any costly misunderstandings.
available for Financing up to $5 Million in any of the Capital Cities?
A broad summary below will assist in understanding the usual practices by
Lenders who operate in this space
There are available facilities for a maximum Lend up to 65% of
the estimated end value, including the proposed Land content,
with a Loan Term of up to 18 months.
Some Lenders will provide this facility where the Security is
Residential -low and medium density (eg. Villa, Town House,
Units and small Land Subdivisions
All will require that each Loan will be secured by a registered
first mortgage and Personal & Directors guarantees will apply,
and depending on the size of the Loan a percentage of Pre Sales may well
be required.
The Lender will engage a quantity surveyor to determine the
cost to complete the development, and to manage the construction
drawdowns throughout the progress of the works, with the quantity
Surveyor being instructed by the lender throughout this process.
The Lender will arrange a valuation of the security property (or properties ).
and the Valuer will be asked to value the property ( or properties) for
mortgage lending purposes both on an 'as is' basis and and an
'on completion' basis assuming the completion of the development in
accordance with the approved plans.
In addition the valuer will be asked to confirm that the property is
readily saleable within 6 months after completion of the development with
all costs associated with the valuation will normally be payable in advance by the borrower
Project risk fees may apply in certain circumstances
These facilities are available to Companies, Unit and Discretionary Trusts and
Director guarantees will apply in these instances
Builders 'All Risks' insurance will be required throughout construction with
Re-Instatement and replacement cover over all existing buildings and
for each building on completion and Home Warranty coverage
(if required under the relevant State Legislation will also be needed.
New developers may find this difficult to obtain depending on the previous construction
experience of the applicants and may needed the services of an Insurance Broker who
handles this type of Contract.
These loans are subject to satisfactory credit reports on the borrower/s
and or guarantor/s. Borrower/s with bad credit loans are under special condition or rather given a higher interest rates compared with borrower/s of good credit.
There are normally application fees applicable that vary between Lenders and
can often payable in two instalments, with the Third party Fees eg. Valuations,
Quantity Surveyors and Legal Fees all payable in advance by the borrower/s.
All loan and security documents will be prepared by solicitors appointed by the
Lender with all legal costs are payable by the borrower/s
Interest Rates are determined differently by each Lender depending on the
developers experience, the complexity and period of the Construction.
In summary it is important that advice is sought from professionals with experience
in this field before embarking on any new venture, be they Lawyers, Conveyancers,
Insurance and also Finance Brokers to avoid any costly misunderstandings.