Top 3 Non-Bank Construction Loans | Compare your rate & terms
You've spent hours searching the internet for the best non-bank construction loans. Have started and stopped looking numerous times and perhaps spoken to a few finance brokers - but you can't seem to find someone who knows what they are doing or whom you can trust.
Regardless of whether you are a highly experienced property developer with a significant pipeline of projects or an aspirational property developer, choosing the right or wrong construction loan will significantly impact your project profitability and ability to grow your project pipeline.
In the current challenging environment of rising construction costs, knowing who offers the best combination of high LVRs, low financing costs and low presales is valuable information - potentially saving you hundreds of thousands of dollars and preserving your cash equity.
Rather than researching multiple websites and lenders, we've done the legwork for you.
What are the best construction loans available in the market?
Firstly, it's important to know that construction financiers are inclined to load up on the line fee, as they can make twice as much from a line fee versus an interest rate.
Line Fee | (A lenders cost to guarantee the funds)
A line fee is charged on the facility limit at all times during the loan term, not on what you actually use.
As illustrated in the graph, nearly 50% of your loan term is being charged a line fee on the full loan amount.
Needless to say, when it comes to construction loans, our preference is lenders who don't charge a line fee wherever possible. Note that, however, all lenders charge line fees for loans above $25 million.
Also, a majority of banks and non-bank lenders are no longer offering fixed interest rates for construction loans, which is not ideal in the current environment.
Top 3 Non-Bank Construction Loans
In determining the best construction loans, we have favoured loans that offer fixed low interest rates.
Non-Bank Construction Loan | $25m to $200m
LVR:
<70% GRV
Interest rate:
BBSY + 2.25% to 3.0% p.a.
Line fee:
2.95% to 4.0% p.a.
Establishment fee:
1.5%
Presales hurdle:
50% of facility limit
Fixed interest rate:
No
Non-Bank Construction Loan | $5m to $25m
LVR:
<65% GRV
Interest rate:
8.49% to 9.49% p.a.
Line fee:
Nil
Establishment fee:
1.25% to 1.5%
Presales required:
Nil
Fixed interest rate:
Yes
Non-Bank Construction Loan | Up to $5m
LVR:
75% GRV
Interest rate:
7.25% p.a.
Line fee:
Nil
Establishment fee:
1.25%
Presales required:
Nil
Fixed interest rate:
Yes
How does your current construction loan compare?
We would happy to run the numbers for you and let you know how much cash equity and financing costs you could save. Request a call back for a no-obligation call to discuss your project finance options.