Private Mortgages Australia is able to assist with completion finance. In this case the Borrower is a family investment company who entered into a construction contract with an independent builder to develop three town houses on the security property.
Security is based on an “on completion” valuation of the three properties. Loan drawdowns will be made on a cost to complete basis.
The build cost for all three townhouses is $650,000. The project is currently built to “Fixing” stage with final 10% of the project to be completed. The builder has outstanding invoices totalling $330,000 which will be payable upon settlement of this loan advance. The balance of the $65,000 will be retained and released upon receipt of the Certificates of Occupancy.
Exit strategy is through sale of the security properties. Two of the townhouses have been sold by a local agent totaling $1,268,598. Upon settlement the first mortgagee will receive first priority of $520,000 and this loan will be cleared from the balance of the proceeds from the two sales. It is a condition of this loan to enter into a Tripartite Agreement with the builder which will allow us to compel the builder to finalise the build contract in the unlikely event that the Borrower defaults.
Security Property Valuation: $1,948,598
Loan Amount: $435,000 (Second Mortgage)
Term: 2 months plus 6 monthly extensions