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What
do borrowers require?
-
Cheapest rates
- Best
service
- Highest
loan amounts
- Great
flexibility
- Low
establishment fees
- Lowest
exit fees
- Speedy
decisions and settlements
The
brokers job is to know which lender is best in all
these fields and to assess which has the capacity
to best suit the clients requirements. There will
never be a lender which can cover every aspect, but
we research every lender regularly to ensure we know
which one suits our clients. For example:-
Finance for an Office/Shopping Centre etc
- 66%
of value
- Good
tenants
- One
month to settle
- We
can arrange at a rate of about 7.40% p.a fixed for
three years or 7.75% fixed for five years.
- Establishment
fees, stamp duties, legal fees, valuations and brokerage
- Exit
Fees - If on a variable rate one month's interest
is required. If the rate is fixed then a fee of
the greater of one month's interest or the rate
to re-invest the funds is normal.
- Partial
repayments - These are allowed, whilst the rate
is in a variable mode, up to 20% of the loan amount,
without penalty, on the anniversary date of the
loan each year.
- Specialised
securities are excluded.
Finance
for Sub-divisions/Construction
The
normal criteria is up to 70% of "hard costs",
i.e.:-
-
Land
-
Buildings
-
Architects and Engineers fees
-
Project management fees
-
Contingencies
-
Site works
-
Power, telephone and water headworks
-
Government approval fees
-
Other consultants
Costs
which the borrower are expected to meet include:-
- Land
purchase costs (stamp duties etc)
-
Interest and loan establishment fees
-
Legal fees
-
Marketing
-
Valuation fees
-
G.S.T
-
Rates and taxes
-
Admin and accounting
These
loans attract a rate of about 3% above cost, i.e.
a total of about 8.50% p.a.
However,
there are also lenders prepared to advance to 80%
of "hard" costs at an interest rate of approximately
1% higher.
In
all cases the fees payable by the borrower are:-
- Stamp
duties
- Titles
Office fees
- Legals
- Valuations
- Lenders
establishment fee
- Brokerage
Specialised
Securities
We
use lenders who are prepared to lend to 70% of value
where the creditworthiness can be illustrated even
if the property is regarded as specialised, i.e. with
limited alternative use.
Rates
are normally 2.5% over cost (30 January 2004 - 8.15%)
plus the aforementioned fees apply.
Interest
only loans are normal, but if the degree of specialisation
is such that a reasonable amortisation level is prudent,
then a principal reduction program is undertaken.
Difficult
or Short Term Loans
Various
non-confirming lenders provide loans assessed only
on the worth of the securities, i.e. proof of ability
to repay is not needed. These operate swiftly, and
with a minimum of fees.
Their
interest rates reflect the level of risk and are generally
in the range of 12.50% plus establishment fees of
1.5%.
Mezzanine
Finance
This
term broadly means "second mortgage" or
top up finance, which may or may not also contain
a measure of equity participation. Rates can only
be quoted on a case by case basis, but in essence
a combined rate generally applies, i.e. say up to
70% at "prime" rates, with the balance at
higher rates. For good quality projects, financed
to 100% of cost (minimum $10 million) an average rate
of around 10/11% could be expected.
Our
Sources
With
two exceptions, all our preferred lenders are non-banks.
Why? - well we find our sources to be more concerned
to provide quick and efficient service and are more
tuned to the value of the securities. In other words
they recognise that property finance is a specialised
art form and does not require an examination of the
borrower as if the loan was to a trading concern.
Unfortunately, too many bankers act as if every property
loan needed a minute appraisal, such as is appropriate
for a BHP loan etc.
The non-banks examine:-
- The
property; its location, use and alternative uses.
- The
quality of the tenants; length of lease and expectation
of future occupancy.
- If
owner occupied, then a fuller appraisal of the borrowers
ability to service the payments is required.
Non-bank
lenders include mortgage funds, credit unions, building
societies and trustee companies.
ties
and that is simply to enable you to obtain the services
you seek.
If
you have any questions regarding our services then
please contact us on 08 9321 1944
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