We have Two Types of Products:
- COMMERCIAL – Development/ Building Finance
- RESIDENTIAL – Home Renovation/ Building a New Home From Scratch.
Construction/ Development Finance.
‘AAA’ Commercial Mortgages has helped to finance thousands of projects over the last 28 years.The ideal developer is someone who has experience developing over many years.
A good developer does not necessarily have to be a builder, but a good builder is a necessary for a medium to large construction project as the risk in a construction loan is in the build itself being completed to a high and accurate standard.
Equity is important. Good lenders prefer the developer to own the land outright or have a small debt. That way they can fund the total construction cost.
Feasibility is the first thing AAA looks at in judging the quality of a project.
The feasibility must include a 5% p.a.contingency fee of the total construction cost.
Interest is capitalised for the term of the loan- Normally these are up to 18 months.
An indication of the cost to the applicant of the capitalised interest is as follows;
If the loan is say $5,000,000 and the interest rate is 7.00% pa, in one full year the interest would be $350,000. The full year interest divided by 65% gives us an understanding/ guide of the payable interest amount. This is $227,500. Note this is because interest is only payable on the draw down amount.
Today pre-sales are very important.
Most of the major banks require at least 100% debt cover sometimes even 140% – why? This assures the bank that 40% of purchasers who buy of the plan will not be able to complete the purchase when the project is completed.
Private lenders – normally require around 25% debt cover.
The off-the-plan purchasers must be arms length from the builder/ developer.
At ‘AAA’ we can put together the strategies that can mitigate the negatives of a lender’s credit department.
Mezzanine and Equity finance is also available for the larger projects.
“The road to success is always under construction”…
|Loan Type||Interest Only or Interest Capitalising for terms up to 24 months|
|Loan Amount||$250,000- $100 million|
|Interest rates||Variable Rate (90 Day Bank Bill + Margin) – Call us for a quote!|
|Security||Eligible commercial & residential propert|
|Establishment Fees||Application, Valuation, QS and Legal fees may apply|
|Ongoing Fees||Progressive drawing fee may apply|
Renovating or Building a New Home from Scratch?
Our Rate 3.86%pa.
Most banks will charge you a higher rate during the construction period, whereas our bank charges the same amount for construction as it does for a normal home loan.
|Loan Type||Interest Only 1-5 years.|
|Loan Amount||$150,000- $2.5 million|
|Interest rates||SAME AS YOUR HOME LOAN – 3.86% pa.|
Click on The Get the Ball Rolling Link Below to make a time to chat to us about your specific construction needs.
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