Recent development finance deals

3 Townhouses construction - Rosanna VIC 3084

Client came to us looking to build 3 townhouses on a block of land in Melbourne with an existing house which would be demolished.

They needed a total loan including refinancing of the current loan + construction of $1,960,000. The estimated values on completion (once strata titled) were $3,300,000.

The property was owned in the personal names.

Their existing bank would not do the loan as residential loan for 3 reasons 1) there were more than 2 townhouses being built and 2) the valuation ordered by the business banker came back a lot lower than expected 3) they weren't comfortable lending on business terms to them in personal names. 

Solution

Mortgage Experts arranged a facility through a major bank at 80% of land value + construction costs.  As the client had PAYG jobs, they intended to hold the properties long term (and therefore the future rental incomes was considered) we were able to arrange the loan at residential investment loan rates over 30 year terms with the first 5 years IO.

22 lot subdivision – Rothbury (Hunter Valley) NSW 2320

Our client had located a 50 acre vacant land site with DA approval for a 10 lot subdivision (lifestyle blocks) in the Hunter Valley NSW.

The site was being sold for $5,500,000 and was being offered with a 12 months delayed settlement.

The client had extensive experience with civil works, earth moving and development and recognized that the site had a great potential for profit.

Each block would realistically sell for around $1M each once subdivided.

The issue was our client did not have the full 40%-50% deposit required for the land acquisition or funds to cover the civil works and other soft costs.

Solution

Mortgage Experts via a referral partner found a joint venture partner who was able to assist with an equity contribution that along with the clients own funds was sufficient to get to the point where the land could be acquired with non bank lender and funds were retained for the civil works.

On sale of the lots the loan was repaid first, then the equity contribution then the profit was split 50/50.

Refinance of loan on development site – Northern Beaches Sydney

Our client wanted to refinance a loan on a development site of 1800 m2 located in Sydney’s Northern beaches.

This site had a DA in place for 6 townhouses.

Our client had minimal previous development experience. They had completed the purchase with a loan amount of $950,000 which was priced at 15% p.a. as their lack of experience meant they did not meet the guidelines of the mainstream development finance lenders.

Solution:

Mortgage Experts arranged a facility via a non bank funder to refinance the loan. As the client had no immediate plans to commence development, we were able to process the loan as an acquisition of residential land rather than a commercial facility or a development finance facility, and therefore had it priced accordingly. As the land was valued as a residential block rather than a development site, the valuation was lower. However, we were able to push the LVR from 60% to 80% to compensate.

Developer finance needed?

Give Mortgage Experts a call. If we can't assist we can point you in the right direction with a referral to other specialists.