Commercial construction Finance
The success of a construction project often depends primarily on obtaining optimal construction finance terms meet the needs of the developer and the development.
Oak Laurel has a wide range of lenders, construction loans and development finance to assist you to build and/or develop property. Oak Laurel can assist you to finance the purchase of vacant residential, commercial or Industrial land, and finance its development. This includes the construction of residential property, retail / shops, commercial property and or industrial property. We have funders that can finance a wide range of development and construction types.
Oak Laurel also has access to funders that can help with the short term funding. This can be of benefit in the initial stages prior to the development approval being granted and in some cases to complete the final stages of a development in the event of a funding shortfall.
Residential construction loans are generally provided on an interest only basis at a variable rate during the construction period. At the end of the construction period the construction loan will revert to a standard home loan or investment loan that has been pre-agreed by you and your lender. If you have development finance for a large scale development the fished property will either be sold at the end of the construction or refinanced from the development finance into and ongoing loan.
Because construction finance typically operates on a draw down basis, that is funds are provided on an as needs basis to pay the builder for the completion of milestones, the borrower will only need to pay interest on the funds that have been ‘drawn down’ (paid to the builder).
Commercial construction financing, for larger scale property development, is typically provided on a variable interest rate basis. However, fixed interest rate loans can be provided in some circumstances such as where the land is acquired and the development is not ready to begin for a certain period of time.
Mezzanine debt / or second tier debt can be provided for some development projects where additional funding is required above the amount / loan to value ratio provided by traditional banks and lenders. Mezzanine finance is typically provided when the developer’s equity is insufficient to make up the difference between the first tier funds and the development costs. Mezzanine debt is typically provided at an interest rate but because the amount is relatively small the total cost to the project is relatively small.
