Giving emerging and first-time property developers and investors the tools they need to succeed.
Maybe you’re looking to lock in your first development, or stack up some early wins – either way, we understand that limited equity and constant time pressures make finding finance a challenge. Our advisors work with up-and-comers in the property game to kickstart your progress.
‘Tradie-developers’ know the residential construction process like the back of their hands. If you’re lucky enough to be handy, acquiring land and hammering out your own townhouse or duplex project is a great way to get paid more for your skills.
Once tools are down on your construction project you’ve got a range of options. Rent out the residences, sell them to owner-occupiers, or a combination of both. Maintaining ownership enables you to take advantage of capital growth and leverage higher LVRs for future finance.
With the right debt structuring, you can leverage your existing properties and completed projects to take on multiple projects for accelerated growth, enhanced negotiation power with suppliers, and risk mitigation.
If the big banks won’t play ball, access to various private financiers helps us turn rejection into opportunity. With one of the nation’s biggest funding networks at our disposal, your project has every chance.
After meeting to discuss requirements, we’ll clearly outline our recommended financing strategy and pre-requisites. Once you’ve given us what we need, it’s up to us out the pedal to the metal to get the approvals.
We’ve collaborated with countless developers, helping them to grow their portfolio from the early days. Having gained insights into the trials, tribulations, and keys to success, we walk the talk when it comes to property development.
The last thing you want is a broker trying to tie you to them before they’ve shown you the goods. We don’t ask you to sign (or pay) anything, until we’ve first presented you with a viable source of funding.
If you’ve got the business case, the blueprints, or even just a bright idea, we’re ready to scope out a financial solution for your dream development.
Found an attractive vacant lot or the worst house in a good street? We tailor options to your situation, sourcing the most sustainable rates for prime real estate. You can then ‘land bank’ until market conditions are just right, value add via development approvals, or get building straight away.
Finance can also cover the administrative, engineering and infrastructure costs of subdividing a large lot into several smaller ones, which can then be developed, sold off, rented, or a combination.
Construction loans generally involve staged payments from the lender to the builder (either an external company or the borrower themselves if an owner-builder), released throughout the different stages of the build.
While standard construction loans don’t cover the preparation phase, sometimes we can assist in financing fees associated with obtaining permits, approvals, design work, and other consulting costs.
The methodology for construction finance is quite different to other property loans or home mortgages. A key difference is the staged release of funds. Once your loan application is approved, progress payments are made at each stage of the building process. A typical 5-stage building process entails:
Generally, you’ll be required to arrange a minimum deposit. The lender will usually set maximums for the percentage of total cost corresponding to each construction stage.
| Construction stage | Max. % of total construction cost |
|---|---|
| Deposit + Slab/Base stage | <20% |
| Intermediary stages | <35% for each stage |
| Practical completion stage | >10% |
Construction loans for owner-builders follow a similar process to traditional construction loans, but with some important considerations. As an owner-builder, you act as the project manager and oversee the construction process, which can offer more control and flexibility. Some lenders may even factor in a living allowance or wage for the owner-builder when determining the loan amount, depending on the scale and complexity of the project.
When applying for the loan, owner-builders need to provide detailed building plans, cost estimates, and demonstrate their knowledge and experience in property development. Lenders will assess the feasibility of the project and the borrower’s ability to manage it successfully. The approval process may be more rigorous for owner-builders, and a larger deposit may be required due to the perceived higher risk.
During the construction process, there is typically more oversight on how the owner-builder spends the funds at each stage. Lenders may request progress reports, site visits, and receipts to ensure that the funds are used appropriately and efficiently. This level of scrutiny is to safeguard both the lender’s investment and the successful completion of the project.
At Northcap, we help owner-builders understand their entitlements and obligations.
Financing a land subdivision typically involves a structured approach that considers various factors. Lenders carefully assess the ultimate plan for the project and its potential profitability before approving the loan. They will evaluate the market demand for the subdivided lots, the location’s attractiveness, and the overall viability of the project.
In most cases, land subdivision loans are split into two components: the land cost and the soft costs. The land cost covers the purchase of the original parcel of land, while the soft costs include expenses related to approvals, consulting, engineering, surveying, and other pre-development activities. Having separate loans for these components allows for more precise financial management and can help optimise borrowing.
Regarding the loan structure, land subdivision loans usually start as interest-only during the development phase. This means that the borrower only pays the interest on the outstanding loan balance until the project reaches completion or the predetermined repayment milestone. Once the development is complete and sales of the subdivided lots commence, the loan may transition to a Principal and Interest (P&I) repayment structure.
We make moves for motivated individuals seeking a financial solution to achieve their lifestyle, business, or project goals. Call, email, or send an enquiry to open the channels of communication.
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