Low Doc Construction Loans
There is no question that funding for low doc loans has tightened. Having said that, to compensate for that tightening, during the month of September we have seen new sources of funding become available. We now have access to a new 65% product for low doc construction loans in the Sydney metropolitan area. It does not include credit impaired low doc loans.
Note:- Construction cannot have commenced
Development finance funding guidelines are as follows:-
Lender can consider funding for multi dwelling developments to a maximum amount of $5 million.
- Funding to lower of 80% of total development costs or 65% of Gross Realisation Value (both exclusive of GST)
- Fixed price building contract with registered builder, (the borrower can be the builder),
- Loan advanced progressively on a cost to complete basis against Valuer and Quantity Surveyor inspection reports.
- Interest capitalized within loan term
- Construction loan terms from 12 – 24 months. (interest only)
- Ongoing residual stock finance (take-out funding) considered on a case by case basis.
- Pre-sale requirements considered on a case by case basis.**
** No pre-sale requirements for developments falling within below criteria:
- up to 6 units.
- loans up to $1.5 million.
Below is a list of questions / information requirements which will assist in determining if a development scenario falls within the lendrs acceptance criteria:
- summary of the scenario (loan amount requested)
- Location of the security: actual street address
- Structure of the borrowing entity: trust, company individual etc (have sponsors undertaken developments in the past?)
- “As is” value i.e. Land purchase price / current market value
- Amount owing on the land if it is already held by the client
- What is the client building: no of units, is DA held? etc
- “On completion” value i.e. value of the property(s) upon completion of construction
- Will they be strata titled or held in one line;
- Value of the fixed price building contract
- Details of licensed builder (web site? / details of similar type construction projects undertaken)
- Exit strategy: do they plan to sell or retain (are there any pre-sales in place?)
- If they plan to retain – what is estimated market rental return
- Does the client have any CRA issues
- Any additional strengths or potential issues we should know about up front.
If you require a low doc construction loan, please call us for a competitive estimate on 1300 LOW DOC