Have anyone got finance from Private Finance Coys?

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

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

I have used them on a few occasions.

They lend at between 1 and 5 % above bank rates.

They take mortgages or caveats, legals are expensive, but they don’t do the thorough checks banks do.

Good alternative if you get stuck.

Byronent
Adelaide SA

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