- No sales are required to commence funding.
- No financials are required, and a self-deceleration of income can be acceptable.
- Very quick turn around and approval timeframes, with funding available in as little as 7 days.
- Funding is available for owner builders, and incomplete developments.
- Funding is available to borrowers with limited development experience.
- Less equity is required for this type of finance, meaning you don’t have to have as much money tied into the project which can be reallocated elsewhere.
- Pre-sales can be expensive with some sales agents charging up to 8% commission to make sales off the plan, compared to local agents who charge below 2%.
What development finance terms are available?
- Construction purposes of single or multi-unit residential properties for owner occupied and investment purposes. You need to have a development approval in place.
- Minimum loan amount is $1M, maximum $10M.
- Loan Terms are available up to 24 months. On average, they are between 12-18 months.
- Property must be located in Metropolitan or Major Regional areas.
- Gearing is available up to the lesser of 85% of total development costs, or 70% LVR on the as if complete gross realised value excluding GST.
- No presales or pre-commitments are required in all funding for this criteria but are always subject to credit approval.
- Indicative interest rates are generally priced from 9.95%, and Establishment fees are from 1.50% but are priced on a case by case basis.
What lending criteria apply for this type of finance?
- The development project must have an approval (DA) in place.
- You need to have a fixed price building contract in place and have full construction specifications completed.
- Feasibility needs to be accurate and costs understood.
- A Quantity Surveyors Report and Valuation will be required to confirm costs and property values are within the current market.
What documents do you need to apply for construction finance?
- 100 Points of photographic identification;
- Low doc (self-declared certification and accountants letter) or full documentation (2 years tax returns) income verification options available;
- Confirmation of the developers Asset and Liability position;
- Fully signed building contract;
- Completed updated valuation report confirming the Gross Realisation based on market values of the end product;
- Quantity Surveyor’s Report confirming the cost of work completed to date.
No presale finance is not for every developer, it does have higher direct costs attached when compared to traditional bank funding but the increased capacity to get your project started quicker, without needing to make sales prior to starting the project.
Red & Co have helped fund over $380M in property developments around Brisbane and South East Queensland. Have a look at a few of our recent case studies here, and contact our team for a free consultation today on 1300 88 73 28 and we can put together a feasibility and direct comparison to help you make better financing decisions.