Construction Loan for First Time Developers

This week’s Deal of the Week highlights how Cressida supports first time developers with flexible and practical funding solutions.

Loan Summary:

• Purpose: Funding the construction of 5 terrace houses
• Loan Amount: $2.2 million
• Interest Rate: 5.95% pa
• Finance Fee: 2%
• Line Fee: 0.25% per month
• Term: 12 months
• LVR: 65% on completion

The Challenge:

The borrower was a first-time developer looking to build 5 terrace houses without a fixed price building contract or a main contractor in place.

For many traditional lenders, this combination can present significant challenges. First time developers are often viewed as higher risk due to their limited development track record, while the absence of a fixed price contract can create concerns around construction cost overruns and project delivery risk. In addition, without a main contractor overseeing the build, many lenders may be uncomfortable with the level of project management and coordination required throughout construction.

As a result, projects like this can struggle to secure funding through mainstream channels, despite the borrower having a strong overall financial position and a capable professional team supporting the development.

Our Solution:

Cressida was able to support the project and adviser by:

• Providing tools and guidance to help assess the project budget and feasibility
• Taking into account the client’s broader financial position, business experience, and the strength of the overall project team
• No registered valuation required
• No quantity surveyor requirement
• 100% capitalised interest and fees to reduce monthly servicing costs

The Result:

If you’re seeking flexible residential property finance outside the traditional bank model, we’d love to hear from you.