A recent survey by Stamford Capital of banks, non-bank lenders and private financiers found that 40 percent of respondents expect the major banks to tighten lending criteria due to the Royal Banking Commission.
The media is finally catching up that there is a credit crunch coming, something I have been talking about in articles as far back as 2016.
We will see more new players enter the market looking to make easy money. Among these, there will inevitably be some shonks who prey on desperate developers.
Developers who were previously bank customers are looking elsewhere for finance. With all the changes in the industry it can be difficult to know what to look for when looking for finance.
Here are some tips for what you should be looking for in a non-bank lender:
A good lender will provide you with a detailed offer document prior to settlement. GPS are upfront people and like to agree on the rules. Our offer document is not just a one pager. Be wary about one pagers, as you only find out all the terms and conditions when the security documents are issued by the lawyers. It is then too late, and you find yourself locked into additional fees and conditions.
Your loan application fee should be payable at settlement – not prior. If you pay the money upfront, you risk losing your application fee should the loan not go ahead. GPS charges our application fee as part of the settlement of the loan. Note, GPS does charge an acceptance fee to cover the costs of valuation, QS, legal and other hard outlays prior to settlement. Any residue from this fee is credited to the loan.
Make a note about where the money will be coming from. GPS is not a broker, but rather has an established, loyal Australian investor base built up over the past 20-plus years. We hold a retail AFSL (Australian Financial Services License) and run around approximately 36 loans at any one time.
If your lender does not meet regular progress draws, your project will stall, and delays will cost you money. GPS has a solid track record of meeting all progress draws from start to finish. Visit our Projects page on our website to see our history of successfully funded projects.
A good lender will add value beyond just providing funding. GPS offers personalised service and quick response times, and developers value being able to speak directly to the owner of the business. We guide developers through the entire application and settlement process. You know who you are dealing with and who to call with questions or concerns. We run a niche business and have been doing this a long time (25 years in July). Visit our About page on our website to learn more about our experienced staff.