There have been a few market factors driving the dynamics of private lending recently.
While the prospect of higher rates once again seems more likely than not, the higher cost of funds and lending rates has raised concerns about valuations and softening yields. That's when a flexible private lender can come in handy. Sometimes enabling cross-collateralization of residential and commercial properties will greatly enhance LVRs. In this new normal of the rate environment, the certainty of effective financing rates is of utmost importance to ensure the successful achievement of borrowers' goals. The role of brokers is becoming even more important in assisting in navigating traps and pitfalls, especially in avoiding the excessive pass-on of increasing costs of funds or hidden fees and clauses.
Softening yields affect interest coverage
Softening yields have also caused some borrowers' commercial property portfolios with banks to fail their annual reviews or be unable to meet interest coverage requirements. This forces landlords to seek alternative bridging solutions before returning to banks when yields have improved. Therefore, it is imperative to seek an alternative lender that not only serves as a transitional solution but also enables eventual refinancing back into banks.
Challenges in Development Projects
Non-income-producing sites, with or without development approval (DA) or planning permits, are also causing stress among land bankers or developers, given the higher holding costs, including rates, stamp duty, and land tax. Private lending solutions become an ideal choice when fees and interest costs can be capitalized into the loan amount to smooth cash flow.
How Can N1 Help?
We can fund any property asset, except construction. We fund residential, commercial, industrial, residual stock, land with and without DA or planning permits--everything except construction. We have recently supported projects as small as $100k+ second mortgages, mid-sized first mortgage acquisitions of $5m+, and large multi-residential properties exceeding $25m. We offer flexible LVRs up to 75% on houses, 55% on development lands, and 65-70% on commercial properties.
Have a scenario?
Our friendly team can be contacted on 1300 001 118 or firstname.lastname@example.org.