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There is a lot of the population that have the “LIVE NOW, PAY LATER” attitude.
And there are a lot people living the “CREDIT FUNDED DREAM LIFESTYLE” new cars, boats, furniture, latest electronic equipment and having the best holidays, using credit to fund it all.
Financial Wellbeing Coach
W: http://www.pfsfinance.com.au
E:[email protected]
E:[email protected]Development Finance Specialist
If you have changed jobs and the jobs were in the same industry, you shouldn’t really have a problem. I had client who had been in his new job for 5 weeks (in the same industry for 5 years) and didn’t have any problems obtaining the loan or mortgage insurance. Tell the lender you have been headhunted and have been given a much better package otherwise you would still be in your old job. This normally works.
Financial Wellbeing Coach
W: http://www.pfsfinance.com.au
E:[email protected]
E:[email protected]Development Finance Specialist
If its under 50sm2 and hasn’t got a kitchen, you will find it is virtually impossible to get finance for.
Financial Wellbeing Coach
W: http://www.pfsfinance.com.au
E:[email protected]
E:[email protected]Development Finance Specialist
Serviced Apartments/hotel rooms are very hard to obtain finance on.You are looking at maybe 50%-65% lvr and lenders do not like doing them as a stand alone deal and expect other security to be lodged as well.
They can be very hard to sell, as there is a limited market.
Lenders do not like rental guarantees as they are often inflated rents and once the lease is over the rent likely to be received is much less than the rental guarantee.
Financial Wellbeing Coach
W: http://www.pfsfinance.com.au
E:[email protected]
E:[email protected]Development Finance Specialist
You will find that because you haven’t had a tax return lodged in Australia in 7 years, that the loan would have to be done as a low doc loan. 99.9% of low doc loans are mortgage insured so therefore any indicative letter of approval will have subject to approval by mortgage insurer on it as well as the standard clauses of valuation, providing additional documents and special conditions etc. This is a standard Indicative letter of approval and you won’t get much more than this from the lenders as they are covering their backs.
With 90% lvr for a lowdoc loan you are looking at interest rates starting in around 8.5% plus mortgage insurance will be very costly and there is not many lenders that will do 90% so you are heading towards non-conforming lenders.
I wouldn’t be paying $200- to this company because they say they need it “to order and pay for valuation” especially because you haven’t picked out a property yet. They are just trying to tie you in with them, so you won’t go anywhere else.
Hope this helps.
Feel free to PM me if you need some more help.
Kerri
Financial Wellbeing Coach
W: http://www.pfsfinance.com.au
E:[email protected]
E:[email protected]Development Finance Specialist
I purchased my first property when I was 19. Actually it was a block of land and as my brother in law was a builder I saved $30k by having him build a house for me. This was my start, it also helped that my older brothers and sisters were all into property investment. I used to always get negative comments from my friends who were always telling me that I should be enjoying myself and spending whatever I earnt to have fun.
I made plenty of sacrifices, worked 3 jobs from the age of 17 until I was 22. All my friends had the overseas trips, the new cars etc. Which didn’t really matter to me as by the time I was 23, I had 3 properties, and a great career as a Mobile Lender with one of the banks.
These days my friends tell me that I’m so lucky.My reply to them is that it wasn’t luck, I was being sensible with what I earned and not wasting it.
At this present time I have 15 properties(I lost3 in a divorce settlement) I have never sold a property.
I try to surround myself with positive people. I find that most people who are negative about investing,do not understand it or they do not want to understand it.
So for all you people who haven’t started to invest yet, this is what I suggest.
Make a plan for the next 5/10 years.
Set goals for what you want to achieve in the future.
Surround yourself with people that are positive about investing and have experience.
Try not to listen to negative people.
Learn as much as you can and keep on learning as you can never have too much knowledge.
Never rush into anything. There is always another deal round the corner.
Surround yourself with a professional team (Solicitors, Accountants, Finance Brokers)
And RESEARCH, RESEARCH AND RESEARCH.Best of luck to everyone. Happy investing.
Financial Wellbeing Coach
W: http://www.pfsfinance.com.au
E:[email protected]
E:[email protected]Development Finance Specialist
Will it be a full doc loan or a lowdoc loan.
What is the postcode.
Financial Wellbeing Coach
W: http://www.pfsfinance.com.au
E:[email protected]
E:[email protected]Development Finance Specialist
One tip I can give people contemplating development projects is to make sure they use a broker who is experienced in this type of finance as there is a limited amount of lenders that provide finance and if you broker doesn’t know what they are doing, what will happen is the project will go from lender to lender and it wil get to the stage that all the lenders know about it and it gets harder and harder to obtain finance for it.
I have seen this happen many a time.
Financial Wellbeing Coach
W: http://www.pfsfinance.com.au
E:[email protected]
E:[email protected]Development Finance Specialist
You will probably find that the banks won’t lend over 80% because the property is in a undesirable location as far as the mortgage insurers are concerned. So therefore 80% is the highest he lenders will go.
Financial Wellbeing Coach
W: http://www.pfsfinance.com.au
E:[email protected]
E:[email protected]Development Finance Specialist
1st Tier Lenders have pretty strict criteria regarding funding construction & development.(Funding against Cost)
The lenders that do Gross realisation funding are not necessarily private Finance Companys. Some of the lenders receive funding from international banks/superfunds etc and you can get rates from around 8.0% – 14.0% depending on the development and type of funding required, LVR’s etc.
Here is a basic Development Finance Checklist.
Full corporate information eg:
ACN
Directors, Shareholders
Date of incorporation
A brief outline of the history of the company and it’s business
Full personal information for directors and guarantors; i.e. date of birth, drivers license no.
Copy of Assets & Liabilities Statements on all Borrowers/Guarantors;
Copies of 2003 & 2002 personal taxation returns;
Copies of 2003 & 2002 financial statements of the borrowing entity and associated companies;
Builders resume and capability statement;
Solicitors, Accountant and Bankers Details, including name, address, telephone number and contact;
Details of the sales and agents to be used;
Details of presales, if any, to be achieved after settlement of the land but prior to the commencement of the construction;
Description of the proposed development;
Project Feasibility;
Copy of plans and DA;Hope this helps
Financial Wellbeing Coach
W: http://www.pfsfinance.com.au
E:[email protected]
E:[email protected]Development Finance Specialist
They can be really expensive.
Here are some funding options available for
CONSTRUCTION & DEVELOPMENT FINANCE
FUNDING AGAINST COST: Is the more traditional, institution based type of lending. The actual cost of development are assessed and the lender will advance funding against cost.In most instancesBanks will require a developer to have contributed at least 20% of the hard cost development as “Hurt Money” as they like to call it.
Where the application is supported by sufficient presales,some Lenders will lend up to 90% of the construction costs when coupled with increased value from the DA, can result in a development being fully funded.
LANDBANK FUNDING: Landbank funding is common where the property is acquired for future redevelopment.and the developer is seeking a HOLD facility;
The property could be Englobo ( ie, Vacant land with out the benefits of development approval) or is lodged and developer is seeking to have it amended or in some cases simply going through the process of selecting a Builder and obtaining pre-sales.
Typically, Bank’s and other Lending instutions will lend only 50% of the land value in these circumstances.Some Lenders are prepared to lend up to 66.66% of the value ( independent of the price ) and in some cases up to 75% of the Value.
CONSTRUCTION MORTGAGE: Is available for construction or refurbishment of commercial or residential properties. Som lenders will lend up to 70% of developments “gross realisation”. An increase in the loan to value ratio to 80% can be made available on a second mortgage basis. Presales are generally not required and the product requires less equity input from the borrower. Capitalisation of interest can be included in loan amount.
GROSS REALISATION FUNDING: Is funding against the end value of the product, generally after the deduction of the GST payable under the margin Scheme. The lender will disregard the actual cost of the development and will take a risk against the asset. In most cases, presales will not be required, which means the developer does not have to discount stock in order to achieve sales targets imposed by the lender.
Some lenders are prepared to advance up to 80% of the end value of the development.
Financial Wellbeing Coach
W: http://www.pfsfinance.com.au
E:[email protected]
E:[email protected]Development Finance Specialist
There are a few brokers that do this.
Here is an article from Mortgage Magazine discussing the concept, which is interesting.
http://www.mortgagemagazine.com.au/pdf/06_2004_mpa4.6_cash_back.pdf
Financial Wellbeing Coach
W: http://www.pfsfinance.com.au
E:[email protected]
E:[email protected]Development Finance Specialist
This is probably the best example I have in my property portfolio in regards to capital growth over 15 year period. I purchased my first ip in Pakenham in 1989 for $98.000-.
Property is now valued at $235,000-. We had it valued June 2000 and it came in at $115,000-. Basically there was no movement out there for 11 years. But it has nearly doubled over the past few years. (Which has happened in most places in Australia)
Financial Wellbeing Coach
W: http://www.pfsfinance.com.au
E:[email protected]
E:[email protected]Development Finance Specialist
All I can say is Research, Research and Research. With the uncertainty of the Property Market and interest rates at the moment, who knows what is going to happen. Talk to people and make sure you have an exit strategy with whatever you end up doing. DON’T RUSH INTO ANYTHING.
I have been in the finance industry for 20 years and now run a Finance Help Line for people in real financial difficulty and have seen many people lose everything because of poor financial decisions or just plain bad luck and trust me you don’t want to end up in that situation.
Do the figures and if it doesn’t work don’t risk it. There is always more deals around the corner.
Kerri
Financial Wellbeing Coach
W: http://www.pfsfinance.com.au
E:[email protected]
E:[email protected]Development Finance Specialist
I know two really great buyers agents in SE Qld. One of them has 118 people on his waiting list. He is great at negotiating and very creative with contracts.
The other one has semi retired but has been involved in RE in SE Qld for 25 years and knows the market backwards.
If anyone wants some info, please contact me.
Financial Wellbeing Coach
W: http://www.pfsfinance.com.au
E:[email protected]
E:[email protected]Development Finance Specialist
This is what my sister & her husband have done ovr the years.
First property was purchased in husbands name only. (this was before they got together)Husbnd lived in property.
When they purchased 2nd property in both names as ppor, 1st property was then sold to my sister by her husband at market value at the time. (she had to pay full stamp duty)
When they purchased 3rd property in both names as ppor, 2nd property was then sold to the husband at market value at the time. (full stamp dutyagain)
They have had no problems from the ato as everything was done properly with market values on contracts and full stamp duty being paid.
Financial Wellbeing Coach
W: http://www.pfsfinance.com.au
E:[email protected]
E:[email protected]Development Finance Specialist
I know a couple of great buyers agents in SE Qld. One of them has 118 people on his waiting list looking for property. The other one does it occasionally.
Financial Wellbeing Coach
W: http://www.pfsfinance.com.au
E:[email protected]
E:[email protected]Development Finance Specialist
Also the lender will also need valuations done and will also require new mortgages to be done over all titles for the new subdivision.
Financial Wellbeing Coach
W: http://www.pfsfinance.com.au
E:[email protected]
E:[email protected]Development Finance Specialist
Haven’t done one of these for along time but this is what I remember.
Plan of Subdivision has to be approved by the lender. As the lender holds a mortgage over the title, normally what happens, your solicitor lodges the plan of sub divison at the titles office after the bank has put a consent on the plan. The bank lodges the mortgage & title at the titles office and they are all allocated a dealing number. The Titles office then issue the new titles.
It can take months for all this to happen and most lenders do not like allowing plan of subdivisions as whilst the documents are at titles office the lender is basically unsecured.
Before you do anything check with your lender and find out if they are willing to allow subdivisions on property they hold as security.
Kerri
Financial Wellbeing Coach
W: http://www.pfsfinance.com.au
E:[email protected]
E:[email protected]Development Finance Specialist
Interest rate of 6.0% yu are looking at P&I repayments of around $1,320 pm.
Everything else you are looking at doing depends on what the property values at on completion.
Financial Wellbeing Coach
W: http://www.pfsfinance.com.au
E:[email protected]
E:[email protected]Development Finance Specialist
