(FINANCE CONSTRAINT) - RESIDENTIAL INVESTMENT - DA APPROVED SITE

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

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  1. Kip Laverack

    Kip Laverack New Member

    Joined:
    24th Nov, 2017
    Posts:
    4
    Location:
    Sydney
    Hi,

    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.

    Issue:
    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,
    Kip
     
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    7,283
    Location:
    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.