Options after Commercial Loan

westminster · 28th Jul, 2014

Can we discuss a hypothetical for my education?

Scenario: a development of 6 apartments which you want to hold not sell. This would need a commercial loan to do this.

BUT at the end of construction and the apartments are on their own titles do you.....

a. convert to 6 individual residential loans
b. convert to a commercial investment loan as 100% holdings in a complex (or 6) is a risk concentration that is too high for resi loan

Corey Batt · 28th Jul, 2014

Convert to resi for sure. This may require a little finesse and spreading among two lenders, but not a huge concern at 6 units.

Rolf Latham · 28th Jul, 2014

standard "take out" finance scenario

depends on what borrower wants, but 80 %lvr at resi rates can sometimesbe hard to pass up

ta
rolf

westminster · 28th Jul, 2014

CJay said:
Convert to resi for sure. This may require a little finesse and spreading among two lenders, but not a huge concern at 6 units.

Ah ha! That is perfect. I had heard that a complete development would be untouchable BUT you are right, if it's 2 lenders it could work.

I was sure it was the thing to do (convert to resi) but I just couldn't work out how.

Thanks

Rolf Latham said:
standard "take out" finance scenario

depends on what borrower wants, but 80 %lvr at resi rates can sometimesbe hard to pass up

ta
rolf

English? Do you mean this is a common scenario where people convert from commercial construction/development to residential?

80% LVR after a development should be possible.

Mick C · 29th Jul, 2014

westminster said:
Can we discuss a hypothetical for my education?

Scenario: a development of 6 apartments which you want to hold not sell. This would need a commercial loan to do this.

BUT at the end of construction and the apartments are on their own titles do you.....

a. convert to 6 individual residential loans
b. convert to a commercial investment loan as 100% holdings in a complex (or 6) is a risk concentration that is too high for resi loan

^ Both can be normal standard resi loan ( Under one title or mutiple strata title)....Concentration risk only occurs when you have multiple buyers, not one./

Rolf Latham · 29th Jul, 2014

westminster said:
English? Do you mean this is a common scenario where people convert from commercial construction/development to residential?

80% LVR after a development should be possible.

Finance English

If you have the serviceability, no issue.

Just finalising the last 2 of a 6 unit site take out now.

ta
rolf

Options after Commercial Loan

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westminster

Corey Batt

Rolf Latham

westminster

Mick C

Rolf Latham

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