When it comes to securing finance, the temptation to focus solely on the interest rate offered can often overshadow other critical factors. And while it’s true that competitive interest rates make for great marketing headlines and can be an easy way to get an enquiry in the door, they don’t tell the whole story.
Here’s why you should consider more than just interest when choosing your finance.
Flexibility
The next big-ticket item to consider is your financier’s ability to shift to the unique needs of your project. Flexibility in your loan agreement is invaluable, especially in the often-shifting world of development. It’s essential to consider whether the lender offers flexibility in terms of repayment schedules, access to additional funds, or the ability to adjust loan terms if circumstances change.
As far as we’re concerned, flexibility is the headline which guarantees our commitment to not only the project at hand, but future projects in your pipeline. Our flexibility is there to help get your project started sooner, see it through to completion successfully, and set the foundation for our next project together once you’re ready.
Relationship Building
Hand-in-hand with offering flexibility comes the lenders ability to view your agreement as a long-term relationship. Choosing a lender isn’t just about the numbers—it’s about trust and reliability. We recommend investigating your potential financier’s track record: How do they handle customer service? Are they transparent about fees and terms? Do they have experience in financing projects similar to yours?
At GPS we pride ourselves on our customer service and our ability to tailor financing solutions that meet the unique needs of each development. Alongside a dedicated, locally-based Portfolio Manager, you’ll receive the industry insights and network connections you need to ensure your project is set for success.
Pre-sales Requirements
The last critical consideration often overlooked is whether pre-construction sales are required. The South East Queensland market is rapidly changing, and despite many financiers knowing about the cost benefit advantage of selling-as-you-go in this climate, many traditional lenders insist on extensive pre-sales to mitigate their risk. At GPS, we offer the opportunity for open discussion of higher Loan-to-Value Ratios (LVRs) and generally do not require pre-construction sales, allowing developers more flexibility and reducing upfront costs.
Our belief is that, for now, there is a greater benefit to both parties associated with the focus on getting construction started first, and allowing sales to come later. With our approach, you’re set to take advantage of the current housing demand, where a presale made now would make you a fraction of the profit compared to selling the same stock item 12 months later.
Funding Source
What might not be an obvious question is ‘where is the money coming from?’. Rates can be an indicator of the funding source and some funding sources are more stable than others, so while some funding options might charge a little more, you know the money will be there when you need it.
GPS has a loyal investor base built and maintained over 30 years. This means that when we fund a project, we know the money will be there because we know what our investors like to see. While cheaper funds might be using overseas money that can change direction fast, our investors are Australia based so they know the market and want to be a part of growing their community. We pay all progress draws within 48hrs so it won’t be funds that you (or your builder) are waiting for.
Total cost of fees
While you no doubt understand what’s best for your unique project, borrowers must consider additional costs beyond interest rates, like application, line and establishment fees, when assessing financier options. When you add everything together, these extra (and sometimes hidden) fees can significantly impact the total cost of the loan over time. So instead of focusing solely on the interest rate, borrowers should look at the average cost spread across the life of the loan.
We’ve previously talked about the real cost of line fees, and the best way to calculate them, here on our blog.
The bottom line is, choosing the right lender is about more than just securing a loan; it’s about building a partnership that supports your long-term success. At GPS, our commitment to transparency and flexibility over ‘low interest rates’ sets us apart, ensuring that our borrowers receive not only made-to-loan solutions but also the support and strategic guidance necessary to achieve their project goals.
We’re ready to chat with you, at any point, to ensure our offerings are tailored to the needs of your project. It’s never too early to give us a call and take advantage of our experience and industry network to get your project started sooner.
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