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thank you Alistair
What are some typical line fee rates?
Hey guys thanks for the replies. Just to clarify, We do work in the construction industry, but this project will not be built by us. We are just acting as the developers. We have an independent builder taking on all aspects of construction not us. All the information i am giving you is straight from the lenders mouth. i am not making this up or trying to interpret it. Like i said, "presales are a must" so we are aware of the need for presales. I didnt say we dont need pre sales. This is no issue for us, because the department of housing has an interest to pre purchase 80% of the units. In regards to the progress payments, i know how the claim process is from a builders perspective, as i work in the industry. However, due to the scale of the project, i have seen in similar situations sometimes a starting payment. Also, the lenders have been telling me the progress payments are structured in a specific way. This structure is what i am after. Also i am curious if the lenders terms suspersede the builders or if this is mutually agreed upon based on different projects. I appreciate the input regarding rates, percentage of funding, presales and the process etc. But those are not issues i need help with. Those have already been addressed. My question is ONLY based on the calculation of the interest. Perhaps, let me word it like this. Forgetting presales and the percentage of costs that is being funded, a construction loan has been approved. The project begins, takes 24 months, and the interest rate is fixed during the whole process at 10% with no charge on the undrawn amount and the total construction costs are $14M. Calculate the interest incurred. THATS ALL.
Ray
Appreciate the comments. Richard, thanks for your response. I have already spoken to a few lenders but just briefly over the phone. Pre-sales are a must which is not a problem. and this is our first project but we work in the construction industry so the lenders werent to fussed about the issue and they were the ones hinting at an 8.5-11% rate. As mentioned above, we are basing the construction phase at 24 months to be safe and we know based on builders quotes, coucil cost, legals, contingency's and professional costs etc the total construction aspect will be $14M. Land cost and interest on the land is not an issue so forget that. What i am really after is, when the progress payments are drawn over say a 24 month schedule, ie month 0 then 6, 12, 18 or something different? Unless i know this i can't calculate the interest component accurately.
Ray
Yes. However I ask this question because I would like to know if our calculations for the interest value we have used are correct or not.
P.S estimated construction time has been considered at 24 months. And interest rate at 10% for a worst case scenario.
Ray
