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The Mardent Group Finance. Overview for Presentation. Highlight the strategy financiers use to cross collateralise Demonstrate strategy to increase property portfolio via “splitting of financiers” Construction loans and renovations with finance. Fundamentals of Commercial lending - PowerPoint PPT Presentation
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The Mardent Group
Finance
Overview for Presentation
Highlight the strategy financiers use to cross collateralise
Demonstrate strategy to increase property portfolio via “splitting of financiers”
Construction loans and renovations with finance.
Fundamentals of Commercial lending Difference from residential lending Fundamentals of how interest margins are calculated Hand out review
Industry Update
Interest Rates will increase over 2011.
Easing of credit on residential owner occupied and investment
95% products being re-released into the market Money markets have stabilized Financiers comfortable with valuations flattening but holding
Banks becoming competitive for market share in both retail and commercial markets
Traditional Structure (Cross Collateralization)
Bank
InvestmentValue $650k
Loan $300k
Owner Occupied
Value $600k
Loan $450k
Step 1: Asset Separation
Lender AOwner occupied
$600k
Home loan
separated
Lender BInvestment
$650k
Interest only
$300k
Line of Credit loan
$220k
Step 2: Using LOC facility
Line of Credit$220k Available
Deposit and costs for 2nd
investment $50k
New lenderValue $200kLoan $160k
Deposit and costs for 3rd
investment $50k
New LenderValue $200kLoan $160k
Step 3: Creating Equity
• Lender D• Investment
loan (5 yrs Interest Only)
• Lender C• Investment
loan (5 yrs Interest Only)
• Lender B• Investment
loan 2 splits• $120k in
LOC
• Lender A (home loan)
Value $600
k
Value $650
k
Value $200
k
Value $200
k
Construction and Renovating Minor Renovations
– No structural changes (cosmetic)– Use equity and re value at end of the process– Simple process
Borrowings on “total on completion valuation”.- Fixed Price Contracts - Easier Project Borrowing by switching to
commercial / development funding
Commercial Funding Difference between commercial and
residential lending– Assessment of a client
Template review
– Interest rate margin
– Risk analysis
– Commercial loans and review of facilities.
Thank You
QUESTIONS?????????
The Mardent Group PH: 07 3217 9233 FX: 07 3899 9519