What lending ratios do the banks use?
The lending ratio (known as the Loan to Value Ratio or LVR) can vary between property asset classes, and between banks. The LVR is also determined by the loan servicing support provided.
It is important that you review the market at the time you want to change your financial arrangements.
Eakins Finance can assess and advise you on your options. Contact us for a free consultation.
What are the eligibility criteria for property developers?
Most lenders require 100% pre-sales or leasing commitments prior to providing finance. However, there are alternative funding options available that may require fewer pre-sales if the project has other strengths.
An important factor banks will consider is your experience in similar projects; they also value experience in smaller projects related to the proposed one.
Talk to one of our brokers to find out more.
What does the bank look for when funding a property investment purchase?
Three key factors banks will look at are:
- the Loan to Value Ratio (LVR)
- servicing position of the debt
- the leasing profile of the asset.
The LVR needs to be under a certain threshold, or the income source must be able to meet accelerated repayments to bring the debt back within policy over a shorter time.
In cases where the LVR is low, you may be comfortable with an interest-only facility to free your cash flow for other asset purchases.
If, for example, you can confirm a new, long-term anchor tenant, you should be able to secure better finance terms that what was previously on offer.
What does a finance broker do?
Your finance broker will help you source and secure a highly competitive loan for:
- englobo land
- construction and development finance
- going concern assets such as drinking hotels and accommodation hotels
- development preapproval and post-approval status.
Your finance broker will not only prepare your application to give you the highest chance of success but also make sure that it is delivered to banks in a competitive environment so that they offer you the best rates and terms.
Speak with one of our commercial brokers to find out how we can help you.
What are the finance broker’s responsibilities?
Your finance broker is responsible for:
- helping you understand the various types of loans on the market
- securing you the most appropriate deal that is available through their network of banks and other financial institutions (and, in some cases, private lenders)
- making sure you understand the home loan process and your negotiating position
- ensuring that your loan application is prepared accurately and honestly.