PROPERTY DEVELOPMENT

Property Development and Finance



Property Development and Finance

Property development finance

Finance for property development generally operates as an interest-only, draw-down facility to finance development as required. Often the interest on a development loan is capitalised during the development period, with the entire loan inclusive of interest charged being repaid upon the sale of the development and or the refinance of any residual debt.

Borrowing capacity and maximum LVR for property development loans

The borrowing capacity you can achieve for development finance will vary depending on the development lending criteria you are required to meet. This will vary from lender to lender and also dependant on the proposal.

Generally speaking, Land Development Cost financing will provide up to 80% of the costs of your development, whilst GVR financing will provide up to 65 - 75%. For a full overview of your borrowing capacity, consult a commercial lending specialist.

Finance options for property development

Land Development Cost (LDC)

Land Development Cost finance provides property developers with the funds to undertake the acquisition and construction of the development. It also includes soft costs such as architecture, engineering and interest costs.

This is the most common form of development finance and is generally limited to between 70%-80% of the overall Land Development Costs of the development project. You may be required to achieve a pre-determined level of pre-sales before finance approval will be granted.

Gross Realisable Value (GRV)

Gross Realisable Value finance provides funds based on the projected end value (excluding GST) of the property development. Under this finance method, you may be able to borrow between 65%-75% of the expected end value of the final development, potentially enabling you to fully cover both hard and soft costs without incurring any out-of-pocket expenses.

Pre-sales are often not required when using GRV finance, but it is generally used for smaller developments only (under $5.0 million).

Development Finance

Property and land development often requires a mix of short and long term finance to acquire sites, build new properties, refurbish existing properties and purchase land.

We can help fund development projects ranging from small scale refurbishments to mulit-million pound new build complexes.

Interest rates are usually arranged on an interest only basis.

Loan to Value rates and interest rates vary dependant on experience and % of funds required for development:

Funding Options

1. Up to 70% of Purchase price and 70% development costs (Lowest Interest Rates) for experienced developers without extra security, (with additional security up to 100% funding is achievable)

2. Up to 100% of Purchase price and 100% of build cost (Higher Interest Rates) lending is available on a case by case basis subject to status and project viability

As an independent property development finance intermediary we can assist the residential or commercial developer with:

* Understanding their finance raising options

* Achieving best value for money and most appropriate finance packages

* Loan serviceability and cashflow forecasting

* Negotiating with lenders to achieve best rates and terms

Development Finance can be raised for both residential and commercial developments ranging from projects requiring tens of thousands to more complex projects requiring several ...