Large commercial building projects can be very complex financially, as different types of financing are required at different stages of the project, and the amount of financing required can be enormous and require multiple lenders to be involved.
This type of project requires a specialist mortgage broker that has a good understanding of the nature of these types of projects, and where to go for the different types of financing. Developers generally have their preferred mortgage brokers who they know and trust to swing the deal, and they will have let their mortgage broker know well in advance about what their plans are and how much it was going to cost. To find the best mortgage brokers in Hawke’s Bay click here. A smart broker will understand the needs at the different stages of the project and will start lining up their financial options, including alerting key non bank lenders that a big project was coming up.
The developing may be using existing land that they have hung onto for a long time or they may need to purchase the land before they can start the project. At this stage the project may appear to a normal bank to be to risky, and the broker may need to go to a non Bank lender who was prepared to take higher degree of risk but obviously for higher interest rate. If you need Bay of Plenty mortgage brokers click this link. The developer will also need to secure finance for the planning and consenting stage, and the broker may bundle all the lending for the section purchase and the planning stage into one loan.
Unless the developer is a very high net worth individual with liquid assets, they will most probably need to do all the development using debt. The actual build project will require a whole new set of financing, and a smart mortgage broker may be able to roll all of the debt for the section purchase and planning stage into the financing required for the build. Once the actual project has begun in the risk is obviously decreased and financial interest rates will be cheaper and finance companies will be more willing to lend the money.
The actual financing for a build project takes place in different stages, with a tranche of finance being advanced at the start of the project, the second tranche being advanced once all the foundations have been poured. The second tranche will cover all the costs around the building erection, and a third tranche may be advanced once the building is complete and the internal fitting has to take place. At this point the risk in the project will have decreased significantly, and most probably all the key tenants will have signed on, so this is the point which will deliver the most attractive interest rates and terms for the developer.
First time home buyers can find the whole process very intimidating, and while they know that they should be getting on the property ladder as soon as possible, they are also naturally very apprehensive about the massive debt that they will have and the massive obligations they will have to make regular payments.
For many first time buyers this is so intimidating that they just simply procrastinate getting into their first time. However a very smart first move for them can be to contact a good mortgage broker, as the mortgage broker will be able to quickly assess the likelihood of getting a good home loan and their ability to manage the mortgage payments. Many people have a good income and have made good savings for a deposit but they have still not taken that first big step of buying their first home.
Mortgage brokers who specialise in dealing with first home buyers understand that in many cases their clients will need coaching, motivation and even cheerleadering to get them over the threshold of their first home. The mortgage broker is perfectly set up to do this (especially in Palmerston North), because he or she knows that they will not get paid until their client has taken the keys for their first home, and so they are very motivated to make sure their client succeeds. Once the client talks to the broker things will start happening very quickly as the broker will need to find out the clients exact financial situation as quickly as possible. They will be a constant thorn in the client’s side until they have supplied this information, and then they will find that the broker moves very quickly to develop an application for the appropriate bank. The broker may have quite a challenge to put the the client at ease about the massive debt that they are taking on, but a good broker will be able to explain things to the client in such a way that it does not appear nearly so scary.
It is important that the broker does not position the deal as absolutely essential, as some clients tend to be scared that they are missing out by not being in the housing market but then put themselves at huge risk by taking on massive debt they cannot afford. It is the brokers job to make certain that this does not happen, and it is also in the brokers best interest because if anything does go wrong down the track then they can lose all of the commission and their reputation.
A good broker will keep their client informed it every step along the path, and they will have carefully selected the appropriate lender and the best lending product for the clients needs. They will make sure that the financing is setup so that it is delivered at the correct time on the correct day to the correct solicitor. Often a broker will tell their new client that they will be “their broker for life”, and that they will contact them periodically to make sure that all is ok and that everything is working well. This will be seen by the client is very good service indeed. For those looking for mortgage brokers in New Plymouth, click here.