Building Finance or development finance is used for large-scale funding of substantial building projects and significant building enterprises. Examples include new residential housing ventures, office block construction or more comprehensive regeneration initiatives.
Your building finance requirements are unique and complex when creating a new structure. Development and construction finance is an extremely sophisticated area that requires core competencies not only within the funding marketplace but also the construction and commercial development industries. When you are a property developer, building finance is an area where expert help and advice is a necessity. A construction loan is an exclusive lending option for developers to assist them through the process. A property development loan is designed utilised to fund the construction of multiple properties on one title. If you’re planning on building a more substantial project, you will need a commercial property development loan.
What percentage do you have to put down for a loan?
As a guide, up to 70% of your construction can be funded. Knowing that every project is different, we can support your project with flexible and innovative solutions. With our comprehensive network, Prime Finance can coordinate a construction loan with very competitive interest rates. Our funds come off our own balance sheet. We can implement a financial strategy to give you the best opportunity in gaining construction property funding approval with ease.
If you have your own portfolio of properties, we can cross collateralise them instead of having to finance the project. Prime Finance looks at each loan and takes it on its own merit.
How do construction loans work?
A construction loan is a style of credit designed by lenders who have proven experience in funding for property development and construction. Construction loans are tailor-made funding solutions that have a structure which is described as a drawdown loan. With this method, the loan is drawn down as necessary to pay for the construction progress in instalments.
For instance, construction loans are paid out in periodic progress payments from the financier at different stages of construction.
There are generally five progress payments in stages, including slabs or base poured, the framing stage, lock up (the building is now able to be securely locked), fitout and practical completion. It is not uncommon to have further steps with more substantial constructions. Any remaining balance is released at the conclusion of the project.
Therefore, a construction loan is not given in total but disbursed as needed. The lender will release only a certain amount of money to you upon completion of each stage. Interest is paid on the amount of the loan used up to the stage reached in the project.
How is the construction loan interest calculated?
Interest on a construction loan is a straightforward formula to calculate. For example: if your current interest rate is 7.00% you merely take the balance that has been drawn or borrowed. You then multiply this balance by .07. That number is then multiplied by 12 (12 months in a year).
Building Finance is:
- Interest-only during construction: During development, you’ll be asked to pay lower, interest-only payments on the loan.
- Flexible with terms: Your lender will ask for specific plans regarding your project. However, construction loans offer much more flexibility regarding loan terms than traditional mortgages. Your loan terms can be adjusted to accommodate your needs for the enterprise.
- Providing you structure with added considerations: The initial reviews will help ensure that your project stays on budget and schedule. Lenders for construction finance can anticipate and understand the need to resolve issues arising during the course of a project, due to their extensive experience.
How do you finance a new construction?
Your lender will require detailed specifications of the construction and plans. Your capital raising options will be carefully and fairly reviewed by an expert team. Our company can develop a solution exclusively designed to suit your requirements and support your capital raising ambitions. You will draw down the loan as required to pay for the building progress repayments. The amount available to borrow will be partially based on the value of the property upon completion of the development. The scale and extent of a project can dictate the type of finance options obtainable to you.
Prime Finance is a private financial institution with sophisticated financial solutions for property developers. With a diverse range of loan products and funding to suit your needs, we will help you turn your project into a reality.
Prime Finance is a leading professional lending company for Building Finance. We can provide you with excellent finance rates with no hidden fees. Establishing a comprehensive range of experience in this industry has allowed us to deliver optimal solutions for financing your building project. We have accomplished more than 25 years in the finance industry, and our extensive knowledge will ensure you have a wide range of options and systems available to suit your requirements. We will listen to your plans and help you to fulfil your goals. Prime Finance will see that your loan proceeds seamlessly, from your enquiry to the conclusion of your project.
We look forward to your enquiry today.