The shockwaves of the U.S. financial meltdown of 2008 hit all the corners of the world. Australian lenders also took the heat and have increasingly become risk-averse. They are willing to lend out but are not prepared to take any risks that would compromise their position. As lenders progressively adopt policies that ring-fence their financial positions. Development financing loans, due to their magnitude and long tenure, take a dip.
Banks will easily turn down an application if the margins are too tight or if in their estimation, the project may take too long to enable the venture to realize the most from the prevailing market conditions.
It doesn’t stop there, successful applications for development financing loans still face many hurdles. Some are self-inflicted through mistakes you can make. Our team will help you avoid the errors below that could still leave you exposed.
Many developers opt to take “short-cuts” to make their business plans more attractive. This is like shooting yourself in the foot. Short-changing costs will catch up with you and could have disabling effects on your financial position. Contact our team for an expert and thorough run through model proposals for development financing loans and make sure that you cover all the costs.
One of the most frustrating turns of events in a venture is when the project is undercapitalized, and the unforeseen happens. It could be a sudden but sharp rise in interest rates or an unexpected stretch of the project duration. Remember, contingency planning is vital for any project.
You can have a quick check of our development financing loans calculator or contact our consultants to ensure that your application has an adequate contingency plan.
Unlike you, banks are not as optimistic about the future value of your project as you are. They take a more conservative approach and employ sober project evaluation. We suggest you take a cue from the lenders and apply the same approach when applying for development financing loans.
But this may require another, expert, eye to have a look at your project. You can call on us to have a professional review of your proposal and give you a realistic future sale price.
Several developers choose to cross-collateralize their development loans with other existing securities or property. Big mistake! This creates challenges when, in future, you may want a partial discharge of the mortgage. A safer option would be to take the money out separately from the equity on your present property, use it as a deposit and borrow separately.
If you’re planning a development project, Brisbane Finance Guru can assist you to secure development financing loans and get your project off the ground. We have the expertise in negotiating and consulting for development financing loans and will provide you with a broad range of finance structuring options.