Funding property development: property development loans tips

Funding property development: property development loans tips

Raising finance for property development

If done in a professional and organised way, property development can be very financially rewarding. However, there are also significant risk involved. If you need to raise finance for your property development project you will need to convince the lender that you know what you are doing and that their money will be safe if they loan it to you. Proper planning to the level appropriate to the complexity of the development will need to be demonstrated to the lender before they will approve your property development finance.

Funding a property development is riskier for lenders than a buy and hold (owner occupied or investment) property loan. Therefore the lender will be more cautious and have stricter assessment criteria. Once you have completed a number of successful property developments and can demonstrate that you know what you are doing, the banks and lenders will be more willing to lend you money. However, until you have built up a track record it is advisable to have an experienced team of professionals, including an experienced project manager.

Using a finance broker that specialises in property development finance will also make your finance application run smoothly. Oak Laurel has specialist finance brokers that know the different lender’s requirements and can guide your application through the process.

What do lenders expect in a development finance application?

When you are applying for development funding you will want to tailor your application to the lender(s) to which you are applying. Each lender has their criteria or conditions that need to be met before they will approve a property development finance application. This is not unlike other types of credit applications, however, the lenders view property development finance as investing in a business and that want to know that the business concept and profitability stack up and are worth the risk of their investment.

By putting together a quality finance submission in the form of a business plan or dossier for your project you will be demonstrating to the lender that you have considered all of the different aspects of the project and that the project is a low risk and profitable investment for them.

The process of putting together a business plan for your project that includes a detailed feasibility will also help you as a developer in making sure that you have considered all of the different aspects, identified problems and how to overcome them before your project starts. If in the end you can’t see a profitable project in the planning stage to there is no point for you to raise finance for property development or undertake the project unless something changes to make it worth doing.

What should be contained in your development finance application?

Your application should contain a summary about the project and its profitability but also contain a project feasibility which is the details of the project and of how you have come up with the numbers. For example if you are building a multi-unit development or multi-townhouse development, you will need to provide a break-down of the costs (where applicable) of acquiring the land; site-Related costs; building costs; professional fees and expenses; letting expenses (where the finished development will be let/rented to tenants); sale costs; legal costs and fees; planning and building regulation costs; cost of raising finance; holding costs; interest charges. You will also need to provide an estimate of the revenue from the sales. The values you are stating in your calculation should be estimated accurately, for example if you state that the finished development is a number of townhouses or units you should be able to demonstrate how you estimated the sale prices based on comparable sales.

Property development valuation process

After assessing your application on paper, if the lender is still interested to proceed, the lender will require a valuation from a professional valuer. The valuer will go through your proposal and independently assess your project. If there are any issues like missing expenses or underestimates of the final sale prices, the valuer will identify them. This is where some poorly planned projects or projects with problems run into trouble.

Required property development profit margin

Often the financier will require the developer to demonstrate that a heathy profit martin will be obtained from the project. Typically, a profit margin of 15% or more of the total development cost (after all expenses including interest) will be required by the lender in order for the project to obtain finance.

Property development finance interest rates

Lenders generally do not publish their Property development finance interest rates. Instead these are negotiated between the lender and the developer or finance broker on the developer’s behalf. This is one area where a good finance broker can be a real asset to your development project. A good finance broker with experience in property development finance will be familiar with the interest rates, terms and conditions that lenders are offering and can often get a better package and your finance approved quicker than if the developer negotiates directly with the lender. This is particularly true if the developer has limited experience in financing developments the lenders may consider them an easy target.

Get your property development financed: Property development finance 

Find out about how to get your property development finance approved.

See more about property development loan tips: Property development tips

Undertaking a small property development? May be a construction loan will be a better option.

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457 visa home loans up to 90% no LMI for Medicos

The post 457 visa home loans up to 90% no LMI for Medicos appeared first on Oak Laurel.

Changes to lender policy means that more types of medicos on 457 visas can borrow up to 90% of the property value without Lenders Mortgage Insurance

The changes mean that more 457 visa medicos (doctors, vets, chiropractors, physiotherapists, medical specialists, dentists and optometrists) will be able to enter the property market earlier while saving the expense of lenders mortgage insurance on borrowing up to 90% of the property value.  The Lenders mortgage insurance waiver is a distinct advantage for medicos as lenders mortgage insurance  can amount to thousands of dollars.

The deal also gives a boost to regional areas as this is where many of the medicos (doctors, vets, chiropractors, physiotherapists, medical specialists, dentists and optometrists) who are on 457 visas are based.

Are you a medico on a 457 visa?

Find out more or contact us about the a medico home loan for 457 visa holders:

Home loans for medicos on 457 visas

On a 457 visa but not a medico?

457 visa holders can get home loans from Australian lenders however, if you are not a medico you will need to pay lenders mortgage insurance when you are borrowing more than 80% of the property value. Find out more about home loans for 457 visa holders here:

Home loans for 457 visa holders

 

 

 

Oak Laurel Mortgage Brokers – Home loans made easy!

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Chiropractors are you getting the cheapest home loan that you can get?

The post Chiropractors are you getting the cheapest home loan that you can get? appeared first on Oak Laurel.

Chiropractor mortgages: Chiropractors may not know that they could be eligible to get a cheaper home loan because of their profession

Eligible chiropractors can get cheaper home loans from some lenders because of their profession. This is because some lenders will offer special home loan deals for chiropractors to encourage them to be their customers.

What is so special about a chiropractor mortgage?

Chiropractors may be able to get home loan specials such as generous interest rate discounts or have lenders mortgage insurance requirements waived.

What this means for chiropractors is that they can use their preferred profession status with some banks and lenders tof pay less on their home loan or investment property loans.

However, not all banks and lenders offer special deals on home loans for chiropractors and the deals from those lenders that do offer specials are not equal. Furthermore, depending on how much you are borrowing and some other factors will mean that what you can get from each lender will change. This is where an Oak Laurel mortgage broker can help by comparing the different packages on offer for your situation.

So the real question is:

Chiropractors why haven’t you contacted us yet?

Contact us to compare the chiropractor mortgage specials available to you.

Chiropractors 

 

Which other professionals, who are not doctors, can get interest rate discounts and/or lenders mortgage insurance waived?

The following professionals may be eligible for interest rate discounts and/or lenders mortgage insurance waived:

Accountants 

 

Dentists 

 

Vets 

 

Doctors 

 

Optometrists 

 

Pharmacists 

 

Law professionals 

 

Energy, Mining and Resources professionals 

 

Oak Laurel Mortgage Brokers – Finance made easy!

Oak Laurel Mortgage Broker

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