Cheapest Lender for $600k Loan for Development

[littletee]

Good luck with CBA at 6.56%.........we could only manage getting them to do a construction loan via Business Lending for 3 x stand alone, two storey townhouses in Adelaide at 8.06% six months ago.

They were very, very clear that any build for more than two dwellings was a commercial lend; they absolutely would not budge to do it at a Resi lend.

Hope it works out LT.

Cheers, Ian.

Thanks Ian, have no idea to tell you the truth, this is what the Aussie Home Loans Broker said to me etc. It'll all come down to which Lender will do 3 Dwellings as Resi like you point out etc. Cheers

 

[Rolf Latham]

Hi LT

Excuse me for speaking out of turn......................

there have been a bunch of brokers that have responded to your request.........Some even in Melbourne, and maybe even a 15 minute drive from you.

I suggest that unless you have made a formal application, that you use someone that knows the most basic places of being able to get policy.

While I understand the Aussie Broker is probably only at initial stages and hasnt YET done the homework, a 20 second enquiry shows the bewlo extract direct from the broker site

The below does match Ians experience.

Now you may already have 3 land titles which may be a different kettle........


ta
rolf


Credit Policy
Building/Construction Loan

Back to Satisfactory Security

Conditions For all Building/Construction Loans

Construction must be completed under a fixed price building contract unless the value of the building contract is equal to or greater than $1 million, in which case Cost Plus contract may be considered
Dwellings are to be retained for personal investment or residential purposes and NOT built for the purpose of immediate sale
Construction loans must not be on an owner builder basis where:
borrowers are the directors of the company (or a party to the firm or partnership) issuing the building contract, or;
company/trust borrowers issuing the building contract on their own behalf
Construction is restricted to a maximum of 2 dwellings on the same title. Construction of more than 2 dwellings should be considered on a commercial basis
For progressively drawn loans, a formal building tender, formal building plans (non council approves) and specifications must be provided by the broker on submission of the application
An 'as if complete' valuation is required for all construction loans
Construction loans will be progressively drawn according to the approved industry standard progress payment schedule.
Customers should be made aware that they must use all of their own equity (e.g. personal savings or First Home Owners Grant, if applicable) before any progressive payments will be made towards construction.

 

[Aaron_C]

It's certainly possible but development is not the same as buying an apartment to live in. The rates are usually higher because the risk for the bank is higher - you can't have it both ways. Higher Leverage = Higher Interest Rate EXCEPT if you provide other collateral (but that would be the same as reducing leverage, right?)

 

[RightValue]

3 TBE (To Be Erected) units on one title with an end value on separate titles of $1.1m incl of GST.

I do a lot of these type of valuations in Melburne's West and North.

I have just run the figures through the model and the 3 unit on one title value came in at $800k.

However if you are just borrowing say $570k then you should be ok as this is about a 70% LVR.

I will say that the construction costs seem high. Have you had an Architect design them?

 

[littletee]

Hi LT

Excuse me for speaking out of turn......................

there have been a bunch of brokers that have responded to your request.........Some even in Melbourne, and maybe even a 15 minute drive from you.

I suggest that unless you have made a formal application, that you use someone that knows the most basic places of being able to get policy.

While I understand the Aussie Broker is probably only at initial stages and hasnt YET done the homework, a 20 second enquiry shows the bewlo extract direct from the broker site

The below does match Ians experience.

Now you may already have 3 land titles which may be a different kettle........


ta
rolf


Credit Policy
Building/Construction Loan

Back to Satisfactory Security

Conditions For all Building/Construction Loans

Construction must be completed under a fixed price building contract unless the value of the building contract is equal to or greater than $1 million, in which case Cost Plus contract may be considered
Dwellings are to be retained for personal investment or residential purposes and NOT built for the purpose of immediate sale
Construction loans must not be on an owner builder basis where:
borrowers are the directors of the company (or a party to the firm or partnership) issuing the building contract, or;
company/trust borrowers issuing the building contract on their own behalf
Construction is restricted to a maximum of 2 dwellings on the same title. Construction of more than 2 dwellings should be considered on a commercial basis
For progressively drawn loans, a formal building tender, formal building plans (non council approves) and specifications must be provided by the broker on submission of the application
An 'as if complete' valuation is required for all construction loans
Construction loans will be progressively drawn according to the approved industry standard progress payment schedule.
Customers should be made aware that they must use all of their own equity (e.g. personal savings or First Home Owners Grant, if applicable) before any progressive payments will be made towards construction.

Cheers Rolf for the post and yeah you're right, with Aussie it's only prelimenary so we'll see if it pulls through. Yes I'm going through sub-division phase as we speak as well, apparantly this may help a lot with the loan etc. Cheers mate