2020 has seen even more new players entering the lending 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 enquiring about development finance.
Here are some tips for what you should be looking for in a non-bank lender:
1. Look carefully at your offer document
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 of one pagers. 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.
2. An application fee should be payable at settlement – not before
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.
3. Will the money be there at settlement?
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 25-plus years. We hold a retail AFSL (Australian Financial Services License) and only run around approximately 30 loans at any one time.
4. Will the money be there for progress draws?
If your lender does not meet regular progress draws, your project will stall, and delays will cost you money. See The Three Month Rule. 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.
5. What value does the private lender add?
A good lender will add value beyond just providing funding. GPS offers personalised service, quick response times and flexibility. 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 for over 25 years. Visit our About page on our website to learn more about our experienced staff.
Richard Woodhead – Managing Director
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