Borrower Case Study: A super loan for a supermarket

PMA settled a loan with a borrower for the purchase of a supermarket Private Mortgages Australia settled a loan with a very happy borrower who needed a quick turnaround on finance for the purchase of a supermarket in country Victoria.

One of the key benefits of a private mortgage for this borrower was that PMA was able to lend based on the valuation price of the property rather than purchase price, which was ideal for the borrower’s situation. The supermarket had previously been bought three years ago for $950,000 however the borrower had managed to pick up the building and the business for a deep discount from a motivated seller for $680,000. This incredible discount was made possible because he agreed to buy the property very quickly and therefore didn’t have time for a traditional bank to take 6-8 weeks to approve a loan. While a bank would typically only lend on the lower of the valuation or purchase price, as a Private Money Lender, we are happy to lend based on valuation.

The valuation of the building came back at $950,000 and based on our due diligence we were happy to offer him a loan for 70% of the valuation of the supermarket being $665,000. The borrower needed the funds for four months to give enough time to refinance the property with another lender and cash us out.

Loan details

Loan Amount: $665,000

Mortgage Type: Registered 1st Mortgage

Loan to Value Ratio (LVR): 70%

Term: 4 Months

Managing the loan

We made sure we managed the deal as it came closer to the repayment date by sending the borrower a friendly reminder at 60 days, 30 days, and 14 days to expiry. This helped keep the lines of communication open and we knew exactly where the borrower was up to and had a clear view of his situation.

The borrower had a few unexpected delays from the incoming lender, but because we had constant communication with the borrower he was able to provide us with evidence of the new loan coming in and so we were comfortable giving him a small extension of two weeks to finalise his refinance.

Win-win

This deal was a great success for the borrower. He managed to complete the deal and make a huge profit. The borrower was so impressed with our service that he has subsequently came back and borrowed from us again  for a different project.

We are proud to say that we have many repeat borrowers just like the one in the above example, and this is because PMA provides a good customer experience with flexible criteria and our win/win approach to private lending.

If you’d like to find out more about how we can help you or your business clients with quick  access to finance then please give us a call on 1300 856 683.