Discussion in 'Loans & Mortgage Brokers' started by Kip Laverack, 14th Oct, 2019.

Join Australia's most dynamic and respected property investment community
  1. Kip Laverack

    Kip Laverack New Member

    24th Nov, 2017

    I'm hoping someone can help me.

    I've recently secured a property in Logan Shire, subject to DD. Key facts:

    - Residential house on circa 2,000sqm
    - DA approved for 4 lot subdivision
    - Currently rented on $380 pw

    Proposed scope:
    Lease for circa 2 - 4 years then refinance to complete subdivision works and sell down each lot.

    1. Due to lending conditions I'm unable to obtain finance with the big 4.
    2. Through my broker, we had pre-approval with Peppers until they noted that the site is DA approved therefore, they cannot accept a 4 lot subdivision within residential guidelines.
    3. Went to Latrobe finance who said they would lend but only on Commercial Terms whereby I have to contribute 35% equity and an interest rate of 8%.

    I have no intention of doing any work on the site for at least 2 - 4 years therefore, adopting Latrobes proposed finance terms does not make commercial sense.

    Has anyone experienced the same situation I am currently going through and how they got around it?

    Alternatively, if there are any brokers here that may be able to assist on how I can get around this, it would be greatly appreciated.

    Thanks in advance,
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

    18th Jun, 2015
    03 9877 3000
    4 units falls under commercial lending for most funders. There are a couple of residential lenders that will do it, but you've already indicated that servicing is a problem with the Big 4. The lenders that will allow 4 unit development are a bit more conservative than the Big 4 so they won't work.

    This leaves you with commercial options.

    You've gone to La Trobe and they are very expensive, but they'll just about anything. There are quite a few lenders in the very wide gap between the mainstream lenders and La Trobe. As it's commercial you probably are going to have to put down a 30% or more deposit but there's plenty of commercial lenders with much cheaper rates and fees.
    Last edited: 15th Oct, 2019
    Leslie likes this.