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Elite Property Finance's Development Finance division is we are the premier partner for property and commercial finance solutions in Sydney, serving clients across Australia and off-shore customers. Our reputation as industry leaders is founded on our commitment to professionalism and our extensive experience in catering to a diverse clientele with varying investment strategies.
When it comes to commercial finance, the bank takes a more conservative and stringent approach to the application. As a minimum, they will require the following information:
Resume/CV of the sponsors, specific to their development experience. The lender will need to see the last few projects (i.e. address, description, gross realisation, profit, cost/time to build, if there were overruns and how they were managed).
Depending on the scale of the project the lender will require information on the builder used. If the project is high scale, i.e. 50 plus units then most lenders will require the builder to be on the lender’s panel. If the builder is not on the panel then they would need to do a presentation to the lender to come on board.
The lender (and the valuer) will require plans, DA approval, project feasibility (lenders will need to see a minimum of 15%-20% profit – this includes total project costings, including land, construction contingency, capitalisation of interest, council fees, stamp duty, etc), Building Contract/Tender, marketing plans (if available), copy of the Pre Sale contracts (if available/applicable), copy of pre lease agreements (for commercial/retail developments) and QS report.
Multi-unit (3 or more dwellings) development can be financed under two methods: Residential Finance and Commercial Finance. However, these paths vary significantly in criteria, processes, advantages, disadvantages and costs.
The fees associated with Commercial Lending are also considerably higher than Residential Lending. Here is an example of the fees associated with Commercial Lending:
Note if the customer is doing an owner build then the banks will generally lend up to 60% of the “end value”.
This is a high-level guide to development finance – the boundaries can be pushed depending on the overall strength of the proposal.