Security in a non-metro area? We can still help!

Classifying a non-metro loan

Lenders classify properties as metro (metropolitan) or non-metro (non-metropolitan) based on their distance from major city centers and the size of the town. Typically, there is a different lending criterion because non-metro properties may have lower demand and the security property may be harder to sell quickly in the event that it needs to be liquidated. 

At PMA, we’re happy to lend using a non-metro property as security if the borrower is looking for a registered first mortgage and will adjust the LVR based on location and security property type  (i.e. whether the property is residential, commercial, industrial, land, rural, or developmental properties).

Below is an example of a non-metro loan PMA has provided for a client.

CASE STUDY: How PMA Facilitated a Property Purchase Loan Using Security in a Rural Location

PMA’s clients needed to settle on a rural property located near the small town of Walcha in the NSW Northern Tablelands but found their bank unable to move quickly enough. Their strategy involved consolidating multiple land titles and selling portions of the property to optimise their investment. However, unexpected delays in obtaining local council approvals stalled the title consolidation process, leaving them in urgent need of funds to meet the settlement deadline.

Why PMA Was the Perfect Fit

Unlike traditional banks, which often take a rigid and time-consuming approach to property financing, PMA specialises in flexible, fast-moving lending solutions. This is particularly true when a borrower is using a non-metro property as security. Understanding the borrowers' need for an immediate resolution, PMA structured a loan that would enable them to meet their obligations and ultimately execute their investment strategy without unnecessary delays.

The Security: A Prime Rural Investment

The security for the loan was a substantial rural residential property near Walcha, NSW, spanning 537 hectares. The land not only offered immense commercial potential but also included a well-situated residence with breathtaking views—an attractive feature for future buyers. 

Given the size and scope of the property, it was evident that this was a high-value, non-metro commercial investment requiring a tailored financial solution.

PMA’s Tailored Lending Solution

Recognising the time-sensitive nature of the purchase, PMA swiftly arranged valuations and structured a first mortgage loan of $1,662,500. This financing enabled the borrowers to complete the acquisition of the property without disruption. 

A key aspect of PMA’s solution was a prepaid interest term, which provided the borrowers with a crucial window to finalise the title consolidations and execute their planned sales strategy. With the properties already listed for sale, this arrangement allowed the borrowers to focus on their next steps without immediate financial strain.

Loan Details

• Loan Amount: $1,662,500 (First Mortgage)
• Property Valuation: $3,325,000
• LVR: 50%
• Term: Initial 6 months prepaid, with up to 3 months in extensions

The Exit Strategy: A Clear Path to Loan Repayment

A well-structured exit strategy is a crucial component of any commercial loan. In this case, the borrowers planned to consolidate 11 separate titles into four distinct allotments, each with individual building entitlements. By executing this consolidation plan, they could then sell the newly defined lots, leveraging the inherent value of the land to repay the loan in full.

This case study is just one example of how PMA’s expertise in non-metro commercial lending can provide a timely and effective solution when conventional financing doesn’t meet the borrowers’ needs. By offering a flexible, short-term funding solution, PMA ensured that the borrowers could seize a valuable investment opportunity, maintain their financial momentum, and move forward with their development plans without unnecessary delays. 

If you are an SME owner or a property investor facing similar hurdles and are in need of a non-metro business loan, PMA may be able to provide tailored lending solutions that fit your needs.

If you have a scenario you want to discuss with us, you may submit a Quick App form or you may contact us via our Contact Page.