Is there such a thing as a loan which can be used for flipping/trading where you do not have to make the ongoing repayments, but rather have the interest compound with the loan being paid out a few months down the track when the property is sold? If so, what sort of extra borrowing costs are involved, and does anyone know a good broker in Newcastle that could handle this?
If you have equity then there are many facilities that allow capitalised interest.
In saying this if a lender knows or becomes aware that you are trading or flipping then they will want to do the deal as a development loan and charge you more.
If you are looking to fund the 100% of the full purchase price plus costs on the security being purchased then there is no such loan to accomadate what you are after.
Richard Taylor | Australia's leading private lender
Thankyou for your quick response Richard. Can you tell me what sort of extra cost is involved in a development loan?
Thanks
JeffHi Jeff,
if you have a base security to use with plenty of equity you wont need to go down the path of a development loan. A capitalising Line Of Credit will probably be sufficient, Although i don't know all your circumstances to recommend this.
Development loans can be quite different from one and other, but when your talking development loan's your talking commercial loans. Historically commercial loans attract higher interest rates and other costs but depending on what the funds are used for there are very competitive rates out there which are sometimes on par with residential rates, it all depends on who you talk to.
good luck!
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