NO PRESALE CONSTRUCTION
MAJOR BANK & NON BANK FINANCE
MEZZANINE FINANCE & PREFERRED EQUITY
Simplicity has a strong track record of sourcing development and construction loans in Sydney, Melbourne, Brisbane, Adelaide & Canberra for projects. We source capital from all the banks and a long list of alternative funding sources. The Team have extensive experience in projects with GR up to $1.5BN A mezzanine is any subordinated debt or preferred equity instrument that represents a claim on a company's assets that is senior only to that of the common shares. Mezzanine financing can be structured either as debt or preferred stock.
CONSTRUCTION LOANS - Majors
From $2 – 500+ million
Facility limits up to 70% LVR •
Maximum Loan to Cost Ratio’s up to 80%
Bank margins commencing at 1.50% with line fees from 1.50% •
Non bank funds from 6.75% with a 1.5% Estab;
No pre-sales requirements for approved projects below 60%
STRETCH SENIOR CONSTRUCTION DEBT
Typically $5 – 50 million
Maximum Loan to Cost Ratio’s up to 90% +
Margins ranging from 2.75% & Line Fees 2.75%
Lower and No pre-sales construction solutions for suitable projects;
Typically $2 – 15 million
Maximum Loan to Cost Ratio’s up to 90%
Margins ranging from 12%+ upwards
Est Fees of 2% reducing for larger transactions
DEVELOPMENT SITE FUNDING
Typically $1,000,000 – $50,000,000
Facility limits generally 65% LVR however we have provided up to 80% LVR in some cases
Major Bank margins commencing at 1.50% with line fees from 1.50%
The non-Bank solution chosen is a private lender than the cost of funds is typically 7.95%pa
Recent Example - No presales construction Sydney
Project: 111 apartments
LVR: 60% of GR
Loan Amount: 42M
Commercial Construction Loans to Support Your Growth
Commercial construction loans provide funding to business investors in the form of a lump sum amount or a credit line. In return for this financing, your company agrees to pay back the borrowed funds, plus fees and interest, over time. Your lender may require constant, weekly, or month by month payments until the loan is fully repaid, based on the specific nature of the commercial loan.
Unlike most mortgages, which are arranged so that the borrower gets the entire loan amount at the outset, commercial construction loans are forwarded in instalments as the project reaches important milestones. As you progress through your construction schedule, your mortgage company will almost certainly require an investigator to confirm each stage of your progress before issuing the next portion of the loan.
This means that the process of commercial finance also encourages you to boost your business.
What We Offer
Property developers or stockholders collect the funds for their property investments through real estate development financing. Commercial funding, as the name suggests, allows the investor to borrow more money from external sources to buy or build an estate. There are numerous creative options for real estate development finance, but the majority of them fall under equity or debt financing. Both debt financing and equity funding have certain benefits and drawbacks.
Simplicity has a proven track record of sourcing expansion and construction loans for projects in Melbourne, Brisbane, Sydney, Adelaide, and Canberra. We can arrange investment from all banks as well as a range of alternative sources of funding. All you have to do is give us a call.
Factors to Consider in a Commercial Construction Loan
The commercial construction loan application procedure goes as follows:
Underwriting commercial construction loans
When you publish your mortgage application, the borrower will quickly assess it internally to determine whether or not to proceed. The mortgage company is looking at the project budget, summary forecasts, underlying assumptions, and the developers' professional experience during this evaluation.
If the lender is interested in moving undefined with the venture, they may provide you with a loan sheet. Once the loan agreement has been evaluated and acknowledged, the lender will proceed to full financing and loan authorization. One of the major differences between a commercial building loan and a property investment loan in terms of underwriting is that a construction loan has no functioning background to consider.
As a result, the property's assessment is solely based on a real estate pro forma. The loan approval idea is similar to that of other commercial loans, but due to the additional risks associated, the project team, construction firm, and market conditions are all carefully reviewed.
Loan approval and closing
Once you've committed, you'll be given a closing checklist that details what needs to happen before the loan is closed and funding begins. As previously stated, the next funds are distributed following a fund drawing schedule for the costs incurred at every stage.
Interest charges vary widely but generally rise in direct proportion to credit risk or potential costs. The greater the lender's leverage or risk, the greater the cost to the mortgagee. Borrower credit scores, working capital, and expertise all influence the financing costs.
Commercial construction loans might become complicated to obtain. Acknowledging how lenders evaluate them, on the other hand, can help to explain the funding process. Simplicity has focused on commercial construction and related development loans. Call our loan specialists today if you need credit facilities or have any questions!