How Private Lending Can Help Your Development

In this article, Remara Credit outlines why private lending could be the answer for development financing across a range of advantages.

Tougher lending regulations, presale requirements and the banking royal commission have made it increasingly difficult for developers and real estate investors to secure finance through the big four banks and other traditional lenders.

In a lot of cases, good projects are struggling to get off the ground due to over complicated lending procedures and internal metrics that bank managers are required to meet.

For many developers and investors, a common question now being asked is where and how to obtain finance.

The growing emergence of private lenders in the Australian market is one avenue worth exploring. Although currently only representing around 10 per cent of all lending in Australia, private lending continues to gain traction and is a viable option that developers and investors should consider.

A private lender could save thousands

The key point of difference between traditional lending sources and private lenders is that private lenders consider each project and client on an individual basis.

Rather than trying to fit, as they say, a square peg into a round hole, they assess each deal based on the project specifics and the borrower’s individual needs and requirements to find the best financing solution.

There are several significant advantages for borrowers in selecting a private lender, including:

Flexible loan structures: Fixed rates for the full loan duration, the ability to access higher LVR’s (as high as 85—90 per cent) and the option to choose the length of the loan. As private lenders assess on a case-by-case basis borrowers will be provided with the best option that meets their unique requirements.

Speed of decision: In many instances, private lenders will forgo the arduous lending criteria and long assessment periods. Find out if you are eligible for finance within hours, not weeks.

Low fees: Borrowing direct from the lender allows borrowers to bypass brokerage fees. Plus given most private lenders secure finance from the wholesale market, the savings are passed on to customers, resulting in extremely competitive rates.

▲ The impact of private lenders in the development finance sector is on the rise.

Simple loan process: Most private lenders offer clients low document or no document options and are more focussed on all aspects of the project, not just the financials. Many also have simple online applications.

Limited to no pre-sales: Begin construction without the need to meet stringent presale requirements, saving borrowers both time and money. Avoid pre-sale commissions, marketing expenses and sale price discounts to achieve the presale figures normally required by traditional lenders. Plus save on interest and land holding costs.

When looking at the private lender market, it can be confusing about where to start and who to speak to.

One reputable option in the Australian market is Remara Credit, a private lender offering land bank, bridging and construction loans to those who typically may have or are struggling to secure finance through traditional lending institutions and banks.

A collective of business owners, property developers and finance experts, the team has more than 30 years’ experience understanding and structuring property finance from both a private lender and borrower perspective.

Remara Credit offers access to a wide range of institutional capital from both domestic and international sources which allows their team of lending specialists to structure the best overall financing solution for the project and client.

“We tend to see potential where other lenders might see risk,” co-founder Andrew McVeigh said.

“It’s our ability to fully understand a client’s situation and all aspects of the project and proposed finance options that allows our team, in most cases, to find a workable solution.’

Remara Credit can assist real estate developers and investors with accessing flexible, quick financing solutions at competitive rates.

Specialists in helping clients with asset security and limited cashflow, if you have previously been knocked back by one of the big four or a traditional lender, Remara Credit might just be the viable option you have been searching for.

 
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