Budget & Finance Options
Financing your new build project.
As soon as you begin thinking about a development project, it’s a good time to consider your finance provider options.
If you are looking to finance your own new home build project, traditional banks are often a good starting point. If you’re looking to finance a multi-unit development project, you may need to consider other financiers such as specialist development financier Rocket Mortgages.
Banks vs Non Bank Lenders
While traditional banking institutions typically offer the lowest finance rates, their criteria for lending is often the strictest. For this reason, many developers choose to finance through Non Bank Lenders. A mortgage broker can be a good starting point, assisting you with your initial equity and income calculations and providing recommendations for where you’ll most likely obtain finance for your project. Many Ashcroft clients choose to work with Rocket Mortgages, a specialist property development mortgage broker.
Weighing up the options
There are a number of considerations beyond simply the interest rate that’s being offered. For example, a bank’s interest rate may be a few percent lower than a Non Bank Lender, but the bank may require you to pre-sell a number of your units before the development starts. Pre-selling can add significant delays to your project which may end up causing you greater costs. In addition, units that are pre-sold sometimes achieve a lower sales price than those that are sold on completion, impacting your overall project returns. Combined these factors can quickly outweigh the benefits of a seemingly lower interest rate.
Payment Schedules, Completion Certificates
Payments will need to be made throughout the building progress and you will draw down your finance as these payments are required. You will need to demonstrate a payment schedule to the lending institute prior to the loan being approved. They will usually also want to see a completion certificate from their valuer and a final sign off from the council before they agree to provide the balance of funds.
When budgeting for a new home or a property development project, you should consider:
How much will my new build cost?
Once we have an understanding of the section we are building on, and the type of dwellings you’re after, we can give you an estimate of building costs.
Our build price includes the house itself complete including carpet but excludes site works and consents. Plans and all aspects of the construction of your new home from the foundations through to floor coverings are included. Site works such as excavation, drainage and services, driveway, fencing, landscaping are not included in our base advertised price, as these costs will vary from site to site. Once we have viewed your site and prepared the plans we will have a better understanding of the likely additional costs that may be involved.