Development loans

General Description for development loans

• Development Finance loan suits applicants looking to complete construction of small-medium size, low-rise residential development projects.
• Looking to build and sell after completion.
• No need for personal financial information to help service the development loan, if you are only building to sell.
• If the application is to build and keep all or part of the development, you will be required to service the total development loans. Therefore all financials, Liabilities assets will be required for the application.

Loan Purpose

• Construction of small-medium size, low-rise residential developments.

Acceptable Security

• Multi-unit/townhouse residential dwellings

Acceptable Risk Grade

• A & B Acceptable Locations Métropolitain. Major regional locations considered.

Loan limits

• Minimum Loan Amount $100,000
• Maximum Loan Amount^ $25,000,000

Maximum LVR

• LVR 70% up to $5,000,000
• LVR 65% up to $25,000,000 Loan
• Amount not to exceed 70% of the total development cost
• LMI Required No

Maximum Loan Term

• Prefer loan term 24 months
• But can do 5 years

Repayment Type Interest only.

• Interest will be capitalised during the construction period within maximum LVRs. Maximum Interest Only Term 5 years

Key notes and required information by banks.

• Quantity Surveyor “QS” at owners cost.
• QS is required if the build cost is > $1 million ex GST & if building 3 or more dwellings.
• Interest expenses to be capped into the total loan amount.
• Funding is ex GST.
• Nil Early Repayment Fee "ERF" which means if you pay out the loan early or before development completion no penalty. 
• Suitable for developer who’s intention is to build and sell (exit strategy)
• Development Loan Application: With some banks will require the loan application to be in a corporate borrower or Company ITR Trust name only.

• Example; If the property title is in a personal name you might have to transfer the title to company name or if the individuals are the owners of the company name being used for the development loan they can be guarantors to the development loan, then no need to transfer title names.

Some building information.

• Builders or Developers CV’s.
• Development Feasibility Analysis
• Copy of Fixed price builder contract
• Copy of buildings & planning permits
• Copy of plans & specification

Summary

• If you are just looking to build and sell and make some money, then the development loans could suit you.
• The application will be based upon end asset value of the development.
• No servicing required if you are just building and selling.
• If there is enough equity in the end asset value you could capitalise the interest payments, which will save you finding the monthly interest only payments each.

If you have any questions please do not hesitate to contact me and we discuss in more details the best option for you.