All Topics / Finance / construction loan for 3 unit development – looking for residential loan. What are my options?

Viewing 9 posts - 1 through 9 (of 9 total)
  • Profile photo of mccozmccoz
    Participant
    @mccoz
    Join Date: 2005
    Post Count: 67
    February 22, 2011 - 11:04 am

    Hi all,

    Can anyone assist?

    Which banks are providing construction loans under the residential arm, for 3 unit developments?

    And will any of them lend based on end value of the townhouses?
    I am able to put up 20% of construction amount, however, I wouldn’t knowing all my options.

    FYI, the money will be borrowed under the name of a family discretionary trust.

    Cheers

    Appreciate any help!

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024
    February 22, 2011 - 1:25 pm

    3 units on the same Title under a residential loan is about limits (course odd lender doing more) and you will probably be limited to 80% of land and 80% construction cost.

    Unlikely to get a GR loan on a residential basis for such a small project.

    Likely rate around 7.4%

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of mccozmccoz
    Participant
    @mccoz
    Join Date: 2005
    Post Count: 67
    February 22, 2011 - 8:08 pm

    Thanks Richard.

    Can you clarify what a GR loan is? I assume it’s a loan that is based on end value.

    mccoz

    Profile photo of Alistair PerryAlistair Perry
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    @aperry
    Join Date: 2004
    Post Count: 891
    February 22, 2011 - 9:31 pm

    As Richard suggested you will only get 80% land value and 80% build cost with a resi facility. Why do you want a resi facility though? It doesn't cost much more to go commercial and, depending where the development is you may be able to get more money, and you can capitalise the interest during construction.

    Regards
    Alistair

    Profile photo of mccozmccoz
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    @mccoz
    Join Date: 2005
    Post Count: 67
    February 22, 2011 - 10:38 pm

    That’s a good point Alistair. I’ve just been assuming that a residential loan will cost me less overall. i obviously need to do the comparisons and work out my priorities eg. less cash in vs higher interest rate etc etc.

    i’m building in the Se Suburbs in Victoria.

    Are there any particular competitive products that come to mind as a starting point?

    mccoz

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024
    February 22, 2011 - 11:45 pm

    If you are Vic give Alistair a buzz and get him to organise it for you.

    You are probably going to pay someone an application fee so might as well get it done properly and engage Alistairs services.

    As he mentioned a Com Loan may even work out cheaper in the long run and certainly maybe more flexible.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of Mick CMick C
    Participant
    @shape
    Join Date: 2010
    Post Count: 1,099
    February 23, 2011 - 12:30 am

    Hi maccoz,

    You wont be able to get the loan based on "end value"…However there are lenders that offer preogressive valution and increase.

    Yes residental is possible, but you must have a strong deal- this is something def for the BIG 4 plus some of the bigger credit unions- the smaller credit union won't tocuh 3 units construction.- even if they did; it be like 60% lvR….><

    Regards
    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
    Email Me | Phone Me

    Same Banks. Better Rates. Served With a Passion.

    Profile photo of mccozmccoz
    Participant
    @mccoz
    Join Date: 2005
    Post Count: 67
    February 23, 2011 - 12:48 am

    Thanks for your comments so far. Much appreciated. I’ve left a message for Alistair to call back for further discussion.

    In the meantime, are there any developers who have recently taken out loans for a 3 unit development, and who did they end up choosing and why? Res/commercial/which bank? etc. Would be interested to hear their stories.

    Thanks again

    Profile photo of Alistair PerryAlistair Perry
    Participant
    @aperry
    Join Date: 2004
    Post Count: 891
    February 23, 2011 - 10:47 am

    Hi Mccoz,

    I took today off to take my daughter to music today, so i haven't received your message yet. As it in Melbourne you have a lot more options than in other cities, as there are several specialise constuction funders who have money, but only operate in Victoria and mostly in Melbourne. It is possible to get loans against end value from some of these, you'tre looking at a maximum 70% including GST, rates and fees are higher than resi, but if there are good margins this will equate to a lot more money.

    I'll call you tomorrow if you left a number with my office.

    Regards
    Alistair

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