Resi loans for 4-unit development?

[propertyVIC]

I've been given the not-entirely-unexpected news that my big four bank won't finance a four-unit development (in Melb) under a resi loan.

The scenario is that we will keep all four when they are built so pre-sales isn't an issue.

Are there any banks which will finance this under resi terms? If so, which ones best to try?

We are in a good financial position, have build quotes, council permits etc all lined up.

 

[westminster]

Yes there are - did you go through a broker? They should have known big 4 wouldn't touch it.

I have 4 villas on a construction loan with Heritage.

Talk to one of the brokers here to see if any of the other second tier lenders will also consider it and find the best deal.

 

[Rolf Latham]

I've been given the not-entirely-unexpected news that my big four bank won't finance a four-unit development (in Melb) under a resi loan.

The scenario is that we will keep all four when they are built so pre-sales isn't an issue.

Are there any banks which will finance this under resi terms? If so, which ones best to try?

We are in a good financial position, have build quotes, council permits etc all lined up.

A few will do it, subject to a good "in one line valuation"

Larger lenders that may consider could be

NAB, Homeside, Bankwest( if not trust), HBS as already mentioned, advantedge (nab wholesale) via a bunch of resellers ( planlend, choicelend. fastlend) or a few mortgage managers.

Most often, the in one line val is the clincher as to what lender works best

ta
rolf


If you need to go over 80 %, and the loan amount is > 1 mill the options are a lot more limited

 

[Shahin_Afarin]

Several lenders will do this no problems. Do you have DA for the dwellings to be on separate titles or will they remain on one title?

Your biggest barrier in this situation is not finance but more valuation.

 

[jonmardell]

I've been given the not-entirely-unexpected news that my big four bank won't finance a four-unit development (in Melb) under a resi loan.

The scenario is that we will keep all four when they are built so pre-sales isn't an issue.

Are there any banks which will finance this under resi terms? If so, which ones best to try?

We are in a good financial position, have build quotes, council permits etc all lined up.

i know of at least 6 that will do it, it will depend on the entity and whether they are all on one title or strata, size and any shared facilities would determine the best lender.

 

[mehram]

Resi Loan for 5 unit development

Hello,

Could someone advise on what is the current interest rate on a Resi-loan (for a first-timer) 5 unit-development & who to approach.

Situation is that we intend to retain all properties, which I expect to be cash-flow nuetral from Year1. We are self-employed, so there is flexibility in showing personal income - not sure how much will be required by the banks?

Refinance $ 407k
Construction $1298k (incl. 15% contingency, Interest Capitalised, Open Space Contribution & all other Fees for development)

Total Loan $ $1,705,000

Value on completion $ 2,520,000
LVR ~ 67%

Thanks in advance

 

[Rolf Latham]

Hi Mehram


5 units gets a bit so so on resi terms, especially where the transaction smells like lo doc or we can play with the 2013 figures

For a 4 unit development early to mid 5s are possible.

For yours I expect youd be looking at comm rates, but there may be some options

How much CASH input do yu have available since the GRV IN ONE LINE VALUATION will likely come down to a range of 15 to 30 % of your per unit expectation.

t
arolf

 

[oc1]

Hello,

Could someone advise on what is the current interest rate on a Resi-loan (for a first-timer) 5 unit-development & who to approach.

Situation is that we intend to retain all properties, which I expect to be cash-flow nuetral from Year1. We are self-employed, so there is flexibility in showing personal income - not sure how much will be required by the banks?

Refinance $ 407k
Construction $1298k (incl. 15% contingency, Interest Capitalised, Open Space Contribution & all other Fees for development)

Total Loan $ $1,705,000

Value on completion $ 2,520,000
LVR ~ 67%

Thanks in advance

In my experience, 5 units AND a first timer = commercial loan. You project has a lot of fat in it. I would bite the bullet and go commercial. Valuations are usually based on end value of each unit less GST. You should then be able to borrow more.

Cheers
Oscar

 

[Shahin_Afarin]

Interest rate would be negotiated based on the loan amount but at worst case scenario you are looking at 5.40%.

Do you have DA to strata the titles thereafter or will they all remain on one title?

 

[Aaron_C]

Most likely will be commercial given it is 5. Rate is a bit higher but no big deal as it is only for 1-2 years.

 

[Rolf Latham]

Most likely will be commercial given it is 5. Rate is a bit higher but no big deal as it is only for 1-2 years.

on the assumption the borrower can obtain take out finance on completion........... not always easy where there is a high concentration of ownership in the one development.

Often take out can be more complicated and queasy and the actual build to start with, but with Shahs' quoted 5.4% or below rate there will likely be no need for any take out finance and that would be a preferable process.

ta
rolf