Birthday Bonanza: Submit a deal, get $250

Private Mortgages Australia is celebrating its third birthdayHappy birthday to us! We’re very excited to be celebrating our third birthday on the 9th July but we want to give the gifts to our referrers. Refer a loan to us between the 1st of June and the 9th of July and have your client accept an Indicative Letter of Offer then we’ll give you a $250 Myer voucher. Easy as that!

Each additional loan will also earn you another $250.

Head on over to our Facebook and LinkedIn pages and share a birthday message with us using #HoorayPMA

If you have any commercial clients that need fast, flexible finance, then get in touch with us now.

 

Rewarding our referrers

Don’t forget that we also offer great rewards to our referrers through our Referrer Rewards program.  As part of the program, the value of all transactions settled with PMA will count towards your referrer rewards total and each time you reach a referrer milestone you will receive a reward from PMA – think a nice bottle of Grange, flights, shopping vouchers and much more. Each time you reach a new milestone we’ll have a bigger and better reward for you.

Budget 2017: Changes to stamp duty hits Victorian developers

Budget 2017: Changes to stamp duty hits Victorian developersChanges to stamp duty concessions in the latest Victorian budget and restrictions from banks on developer finance are driving property developers to seek alternatives for finance.

The 2017/2018 State budget has introduced changes stating that from 1 July 2017, purchasers of off-the-plan commercial properties or residential investment properties (not yet constructed) in Victoria will be liable to pay stamp duty on the purchase price or the market value of the property (whichever is greater). This will not affect owner occupied off-plan purchases.

Until now, Victorian purchasers of real estate that was not yet constructed were only required to pay stamp duty on the value of the land and any improvements that were already constructed on the land, as at the date of the contract. The value of any construction or refurbishment that was carried out on or after the contract date and before settlement was disregarded for the purposes of calculating the purchaser’s stamp duty liability.

Under the proposed new regime, purchasers of commercial properties or residential investment properties who enter into an off-the-plan contract of sale on or after 1 July 2017 will be liable to pay duty on the purchase price or the market value of the property (whichever is greater).

This will have a significant impact on the purchase price feasibility for property investors and the confidence of developers to attract sufficient pre-sales to obtain financing in the current challenging lending environment. Furthermore, obtaining finance for development projects has become even more difficult with banks placing stronger restrictions on lending and increasing serviceability requirements.

Property developers are copping blows from both sides, however there are still options for obtaining finance for projects from alternative lenders like Private Mortgages Australia. The flexibility of non-bank lenders will be an attractive option for developers who are finding it difficult to access a loan following the restrictions being put in place by the banks.

To discuss developer finance please get in touch with Private Mortgages Australia.

Brokers can achieve 50% market share for business loans

Brokers can achieve commercial and business lending origination

The Finance Brokers Association of Australia (FBAA) has said that brokers can achieve 50 per cent of commercial and business lending origination.

The FBAA’s executive director Peter White said that brokers in Australia “have every opportunity to follow markets like the UK [where brokers have around 70 per cent market share] and dramatically increase origination market share”.

He said: “The high level of professionalism and best practice engaged in Australia under our regulations, and genuine concerns for skilled conduct producing best outcomes for borrowers, is a recipe for more and more borrowers using brokers.”

As an advisory board member for the Small Business Association of Australia (SBAA), Mr White said that opportunities exist for brokers in the small business sector to improve the service they currently provide.

“Many brokers are very proficient at business and commercial lending, but they need stronger knowledge skill-sets that deepen their understanding of how those loans function within business markets.

“If you are dealing with a borrower who is in an aged care facility, you need to understand the aged care market and its needs. Same with hoteliers, restauranteurs and motel owners, so you can speak their language and gain their respect.

“When you actually know their industry and market, you will own the right to their business,” he said.

This article originally appeared on SME Adviser.

Funding options for settling a development site

Funding options for settling a development siteIn this guest post, PMA referrer, Dan Holden, Director of HoldenCAPITAL, writes about the benefits of using private capital to settle a development site.

Banks are very reluctant to get involved in lending against development sites. Some developers were getting sites funded as house investment loans because there was an existing house on the land they were purchasing. This was all too common until 2015, when the valuation industry was ordered to make a note wherever they thought the purchase was actually intended for a development project rather than a passive rental return house. The heads up from the valuer to the bank resulted in loans being declined if the bank believed it was for a development project.

Some of the reasons the banks are so reluctant to lend against a development site include:

  • An inability to prove the borrower can service the monthly interest, usually requiring 1.5 times interest cover from recurring income.
  • The main exit strategy is via a construction loan, which the banks are now only doing on a selective basis.

Banks take a view that they will only lend up to 75% of total development cost for the construction loan, and the land in a development project should typically takes up less than 20% of the total development cost. If they were to advance monies against the land, then they are reliant upon the developer putting in further cash to actually convert it into a construction facility. Being reliant upon a developer to find more money down the track is not a palatable credit answer. To put that in numbers, if you had a $10 million TDC project and the land was $1.8 million, the bank is only going to lend you $7.5 million to build the project. So if you don’t have $2.5 million now, they won’t rely on you finding it under your pillow in six months’ time.

We have seen a rise in developers using private capital to get these loans completed quickly and without the fuss of proving serviceability or an exit strategy. The cost of capital is higher at 15%p.a. however, at a lower LVR and/or with a robust sponsor we have been able to secure 12%p.a. While 15%p.a. sounds high, it is typically just for 4-6 months while the developer finalises his BA and any marketing, so the overall burden to the project is fairly insignificant. It is also better than using cash for that period and if you’re an elite property developer, you would want to see your cash invested at better than 15%p.a.

Dan Holden is Director of Holden CapitalDan Holden – Director, Holden Capital

HoldenCAPITAL is a specialist construction finance group, recognised as a market leader through its successes in deal structuring and the sourcing of debt and equity solutions.

Dan has over 13 years of development and finance experience which includes over six years in finance consultancy and funds management. You can contact Dan at [email protected].