Hi all.
I am just about to jump into my first residential development. When I first bought the land I did my feasibility on the then town plan which would allow me to develop 6 units. Since then the town plan has changed giving a greater density which now allows me to build 9 two story town houses.
I have discussed financing the development with my finance broker who has informed me I am in a position to finance the 6 unit development on my own using construction finance, then when the construction is complete I can refinance the six units using a residential loan.
I would prefer to develop the 9 units, but from what I can gather and from what my finance broker tells me I would no longer be able to re-finance using a residential loan and would have to go to a commercial loan, meaning a higher interest rate. There is also the issue of having pre-sales, lower LVR and numerous other hurdles to clear if going commercial.
Could any of the more enlighten amoungst us give me any suggestion for creative financing to enable me to go ahead with the 9 units instead of the six I know I can finance.
Regards
Noseyknows
The broker is correct. What is the LVR you are wanting, the total loan amount for the construction of 9 units and the postcode of the development?
TheFinanceShop | Elite Property Finance
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You can probably get the 9 financed with no pre sales, if you're prepared to pay higher fees and rate during construction, you could then finance out the end product with a few different lenders. You will get lower LVR, but they also value the property differently, so id doesn't mean you can borrow less money.
Adding to the other 2 comments.
9 isn't out of the question although Alistair mentioned you might end up paying a higher rate initially without pre-sales.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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