Types of Construction Loans for Development of Residential & Commercial Properties in Australia

Property commercial finances are used by property developers and property investors in Australia who are looking for developing residential, commercial, industrial, office, retail and other properties in Australia. Such construction loans usually span between 12-24 months, depending on the lender and the circumstance.

Low doc property construction finance, stretched senior construction finance and full doc development finance facilities are general categories in which all the construction loan structure falls.

 

1. Full doc development finance

In order to obtain this type of financing, property developers or investors in Australia are typically required to provide the current financial data, pre-sales or pre-leases of the property and other additional documentations. In Australia, it is considered as one of the most inexpensive property construction loans available to the investors or developers, in regards to interest rates. Property investors or property developers may be able to obtain a loan to value ratio (LVR) of up to 85% of the Total Development Costs (TDC) of the property.

Or, they can get a limit of 70% of gross realizable value (GRV), whichever is the lesser amount. It is important to understand that this type of financing in Australia require a minimum of two years of financial statements and tax returns. In addition to this, at least 80% pre-sales for construction projects over 10 units is also required for approval of this type of finance for projects anywhere in Australia.

 

2. Stretched senior construction finance

Senior stretch loans are usually provided by the banks or other financial agencies for development of residential or commercial properties. Property investors or property developers may receive financing which is equal to or more than the total lending value of their current and fixed assets in Australia. At present, many reputed financing agencies provide stretched senior property development finance that can extend to 90% of TDC and 75% of GRV. 

 

3. Low doc development finance

One of the major benefits of availing these financing solutions is that it provides the property investors or property developers with the option of obtaining construction loans with minimum or no pre-sales. This type of finance in Australia is generally much more flexible in its lending criteria.