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Development financing is a totally different ball game to your mum and dad investor funding.
I dont have enough room on this post to answer all of questions safe to say that in the current climate funding is a lot harder than it used to be for a variety of reasons.
One of the biggest issues is the reduction in the number of lenders offering such finance.
Non of the big 4 really involve themselves in Gross Realisation or End Value Finance so you are left to the specialised Banks and Financiers. Pre-sales are important as well as good net asset base.
All in all still doing a number of good sized deals for developers but track record is important as well as good understanding of the industry and its hurdles.
Richard Taylor | Australia's leading private lender
Hi Maree
Very nice to you to say so.
Valuations instructed today so will be touch.
All fingers crossed.
Richard Taylor | Australia's leading private lender
At the moment 2-3 weeks is swift with a lot of lenders taking a lot longer than that.
Some lenders are taking 14-20 working days to open the application let alone approve it so expect to be in for a lenghty wait and lot of additional questions and documentation requests.
Richard Taylor | Australia's leading private lender
GOM
An offset acccount is a totally separate standalone transaction account whearas a offset redraw account is part of the loan account where funds sit in the loan and can be redrawn at any time.
In essence they sound the same but for tax deductability purposes theyare very much different.
Richard Taylor | Australia's leading private lender
i understand it you can use an offset account with fixed interest rate loans as well as variable.
I am only aware of 3 lenders where this is possible and 2 of those do not actually offer a 100% offset account it is actually an offset redraw account. Big Difference.
There are a couple of other options but loan planning and structuring is not something to be taken lightly.
Richard Taylor | Australia's leading private lender
Do we assume your Solicitor gives you back your legal fees if you sell your property in the first 18 months.
Or do you discount your own charges in business by 50% if someone asks you.Ask a broker to give you a rebate or refund for using their services and see what answer you get.
You have to be kidding me. Any broker that refinances for refinancing sake is to be avoided but given that some of the loan packages out there make it compulsory that the loans are tied together i hardly think your Bank manager is going to give you independant advice.
Thankfully most of clients buy more than 1 IP and we work together in building their portfolio.
It is not matter of taking a quick commission and leaving them to it.
Richard Taylor | Australia's leading private lender
I am with Terry you probably have not had the loan structured correctly in the first place so need to take steps quickly to avoid further issues.
Establish a separate line of credit on the current IP and use this to fund the deposit and acquisition costs for the next property.
I am assuming you will qualify for the FHOG so maximise your borrowings and deposit these funds into an offset account together with your salaries and rents.
Keep the loans separate.
Richard Taylor | Australia's leading private lender
Mick
In the current climate financing such a sized development you wouldf be limited to circa 70% LVR.
Did a 16 unit block in South Sydney last month and we only got 65% lvr.
Richard Taylor | Australia's leading private lender
Ok thats probably why.
As far as I now Bendigo only go to 90% lvr.
Richard Taylor | Australia's leading private lender
Terry
Did 2 with NAB this week alone.
Richard Taylor | Australia's leading private lender
Your Bank officer is wrong as IO with 100% offset on a PPOR is available.
Richard Taylor | Australia's leading private lender
Sounds like your broker has just cross collateralised the loan over the 2 properties and therefore you have no line of credit to access to cover any shortfall.
Unfortunately you will need to find the balance of funds yourself.
There is no concession on bank costs with a health card so you might be confused over the benefit here.
Richard Taylor | Australia's leading private lender
GOM regretfully both require genuine savings.
Richard Taylor | Australia's leading private lender
Hi Craig
All i would say is if you only want an 85% lvr with the balance of funds coming from a combination of family gifted deposit and FHOG you could do a lot better than either of those 2 organisations.
Have a couple of household names who would look at the deal with no interest rate or applic fee loading.
Richard Taylor | Australia's leading private lender
Sorry to disagree guys but that is not the case.
Gifted deposits are ok and there is still one lender who will go to 95% LVR and does not require any form of genuine savings as long as you have job and residential stability. Any external debt they want to see the loan statements but all else is sweet.
It is 95% less LMI and the application fees are a little higher but all in all a good product if the glove fits.
Richard Taylor | Australia's leading private lender
I hope you mean Invest rather than Incest.
Richard Taylor | Australia's leading private lender
No if you are not gearing into the property the property will be owned simply by the name of the Superanuation Fund i.e XYZ & ABC as Trustees for the Smith Super Fund.
Gearing through a property warrant is different however that was not the question.
Richard Taylor | Australia's leading private lender
Zach
Great post mate but South Carolina is a long way from little olde Brisbane.
Richard Taylor | Australia's leading private lender
You would not pay principal off any of them but deposit the funds in a 100% offset account linked to one of the properties.
If you have got an offset account then look to refinance to a product that does have.
Richard Taylor | Australia's leading private lender
Whilst i am sorry to hear H&R dealings with a Broker were not the best remember if you approach the Bank themselves it is not in their interest to structure your loan in the manner you require.
One of the BIG 5 actually has it as a condition of their letter of offer that under the Professional Package 1 loan must cover all properties. A good independant broker with a few IP's himself surely has to be a better option.
Richard Taylor | Australia's leading private lender
