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Frequently Asked Questions
About Bottom Line Finance
o Bottom Line Finance are Brokers. We like to get this clear since a lot of “lenders” in the private lending space are actually brokers representing themselves as lenders and wasting the valuable time for genuine borrowers.
o A lender only has a single offering for you and it is likely that with all the lenders out there you do not know, there is a better offer that you don’t know about.
o We deal with lenders all day, every day. We know who is credible and who is worthwhile avoiding. We hear about what is going on in the industry, who has issues, who has funds available, who is hungry, who is dropping rates, who has new products, who are the credible new entrants chasing deals, etc, etc
Basically – We know what is happening because we are in it full time. Developers who don’t have full time finance people on their team could never keep up with what is happening in the industry. Our experience and exposure, inside knowledge and deep networks are there available for you to take advantage of. Is the brokerage worth all that? – ABSOLUTELY. Ask yourself what is at risk if you need to learn tough lessons the hard way by trying to navigate funding yourself.
o You benefit from the volume we send to lenders. You may do one deal a year with one lender. We put numerous deals a year to the same lender from different sources. Therefore, we have a relationship based on multiple interactions and you reap the benefits.
o A specialist development finance broker like Bottom Line Finance will take into consideration the interest rate and fees AS WELL AS the terms, the opportunity cost, the commerciality and flexibility of a lender, the OVERALL BENEFIT to the borrower. The cheapest rate is NOT ALWAYS the BEST deal.
o Bottom Line Finance charges nothing to review a scenario and gauge interest from lenders.
o We will not charge a cent unless there is confirmed interest with lenders.
o Once there is confirmed interest, we will enter a formal agreement and fees will be fully disclosed and agreed prior to further work by the borrower or broker.
o A significant proportion of fees will not be payable unless a loan is secured and will be payable when loan funds are drawn.
o We will not charge a cent unless there is confirmed interest with lenders.
o Once there is confirmed interest, we will enter a formal agreement and fees will be fully disclosed and agreed prior to further work by the borrower or broker.
o A significant proportion of fees will not be payable unless a loan is secured and will be payable when loan funds are drawn.
o No fees will be payable to Bottom Line Finance in the first instance. First, we review your deal at a high level and discuss with lenders to gauge interest in your deal.
o Once there is lender interest, we will put forward a fee proposal outlining all Bottom Line Finance fees as well as the lender pricing that has been indicated.
o If you are happy with the proposal we enter a formal engagement to secure funding offers on your behalf.
o Depending on the amount of work required to prepare a loan submission, a engagement fee may be charged for this work. If an engagement fee is payable it will be a relatively small amount upon entering a formal engagement.
o Bear in mind an engagement fee tells us you are serious and committed to the process. Before we ask for an engagement fee, we have already invested time in good faith to get interest from lenders.
o Once there is lender interest, we will put forward a fee proposal outlining all Bottom Line Finance fees as well as the lender pricing that has been indicated.
o If you are happy with the proposal we enter a formal engagement to secure funding offers on your behalf.
o Depending on the amount of work required to prepare a loan submission, a engagement fee may be charged for this work. If an engagement fee is payable it will be a relatively small amount upon entering a formal engagement.
o Bear in mind an engagement fee tells us you are serious and committed to the process. Before we ask for an engagement fee, we have already invested time in good faith to get interest from lenders.
o Yes. By engaging Bottom Line Finance exclusively, we agree a commitment to each other meaning you will get the best from us.
o We work hard for our clients and commit to them completely when they are committed to the process and value our work.
o Deal “shopping” or taking a deal to anyone who will listen will only undermine the chances of securing a genuine funding offer. This is especially true when multiple brokers have the deal and each take it to a common lender.
o In our experience the developer focussed on “shopping” a deal to multiple lenders and brokers is more concerned with saving a small amount short term rather than focussed where they should be i.e. getting funded and building a project.
o We work hard for our clients and commit to them completely when they are committed to the process and value our work.
o Deal “shopping” or taking a deal to anyone who will listen will only undermine the chances of securing a genuine funding offer. This is especially true when multiple brokers have the deal and each take it to a common lender.
o In our experience the developer focussed on “shopping” a deal to multiple lenders and brokers is more concerned with saving a small amount short term rather than focussed where they should be i.e. getting funded and building a project.
About Our Funding Partners
o Bottom Line Finance has an extensive network of alternative investment and lending channels including mortgage funds, property funds, investment banks, family offices, high net work lenders and investors. We also work with traditional banks and second tier lenders.
o Yes. In almost all instances, our lenders have funds domiciled in Australia and it is our preference to work with lenders who have funds onshore. On the rare occasion funding comes from overseas, the lenders are of high quality, reputation and credibility and have been verified as a genuine option.
o Construction (Luxury House, Townhouse, Apartment, Commercial), site acquisition, land banking, residual stock, investment
o All property types.
o 1st mortgage (Senior) Debt (Construction, Investment & Business Purpose), Mezzanine / 2nd Mortgage (Junior) Debt (Construction, Investment & Business Purpose), Preferred Equity, Equity, Joint Ventures, Fund Through arrangements.
o Short Term Funding (1st & 2nd Mortgage, Private Lenders, Business Purpose).
o size from $2 Million to $100 Millions (from Duplex to Tower)
o Locations across Australia – primarily Metro areas.
o All property types.
o 1st mortgage (Senior) Debt (Construction, Investment & Business Purpose), Mezzanine / 2nd Mortgage (Junior) Debt (Construction, Investment & Business Purpose), Preferred Equity, Equity, Joint Ventures, Fund Through arrangements.
o Short Term Funding (1st & 2nd Mortgage, Private Lenders, Business Purpose).
o size from $2 Million to $100 Millions (from Duplex to Tower)
o Locations across Australia – primarily Metro areas.
About Your Project
o Total amounts available depend on several variables including the developer, builder, experience, developer funds contributed, type of development, profitability, presales etc. The degree the variables weigh on a lending decision is at the discretion of the lender.
o Generally, for a senior construction debt facility, a developer can borrow up to 65% of completed value (excluding GST and selling costs) up to a maximum of 80% of total development cost.
o For a more accurate estimate of funding possibilities, please get in touch by phone or email. It’d be great to hear about your deal in detail.
o Generally, for a senior construction debt facility, a developer can borrow up to 65% of completed value (excluding GST and selling costs) up to a maximum of 80% of total development cost.
o For a more accurate estimate of funding possibilities, please get in touch by phone or email. It’d be great to hear about your deal in detail.
o Interest rates and lender fees vary substantially depending on project metrics and variables.
o The costs range from low-mid single digit rates for bank deals with strong deal metrics and 100%+ debt coverage in qualifying presales through to high teen-mid twenty percentage rates for high perceived risk and/or mezzanine/preferred equity.
o The costs range from low-mid single digit rates for bank deals with strong deal metrics and 100%+ debt coverage in qualifying presales through to high teen-mid twenty percentage rates for high perceived risk and/or mezzanine/preferred equity.
o If you have presales, we have more lending options available however there are lenders who will consider “no presale deals” in good locations, for experienced developers or for smaller size developments.
o Generally, yes.
o There are lenders who will accept some valuations issued prior to their engagement however the majority will need to instruct their own valuations.
o There are lenders who will accept some valuations issued prior to their engagement however the majority will need to instruct their own valuations.
o Lenders will likely need quantity surveyor reports for construction projects
o All other fees will be outlined in lending proposal or offer and likely include out of pocket expenses such as legal fees in addition to borrowing costs, line fees and interest.
o All other fees will be outlined in lending proposal or offer and likely include out of pocket expenses such as legal fees in addition to borrowing costs, line fees and interest.
o Mortgage (1st or 2nd depending on the type of loan)
o Personal Guarantees – no borrower/director wants to provide these and no lender wants to make loans without them. A guarantee says to the lender that you are prepared to back yourself and hence it is likely not negotiable.
o Fixed and Floating charge over assets of the borrowing entity
o Other security on a case by case required by the lender.
o Regarding security, it is important to remember the “Golden Rule” i.e. “The person with the gold makes the rules.”
o Personal Guarantees – no borrower/director wants to provide these and no lender wants to make loans without them. A guarantee says to the lender that you are prepared to back yourself and hence it is likely not negotiable.
o Fixed and Floating charge over assets of the borrowing entity
o Other security on a case by case required by the lender.
o Regarding security, it is important to remember the “Golden Rule” i.e. “The person with the gold makes the rules.”
o Absolutely. We are happy to review scenarios $1M+ for newer developers who are committed to the process and serious about making a career from property development. We understand that the developer doing a small single deal today is likely an entrepreneur who will grow in time to do multiple larger deals down the track. We are keen to partner with new and experienced developers for the long haul.
General
o Line Fees are different to Interest Rates. Interest rate is applied to the drawn balance of the loan and Line Fee is applied to the loan limit from day one.
o When some borrowers/lenders talk about a rate, it includes a line fee however it is very important to distinguish so you are comparing “apples with apples”
o For example, Interest rate of 9%pa plus a line fee of 3%pa. Some people might just add these together and quote a rate of 12%. That is a simple way to look at it as long as you understand that it’s far from accurate.
o Plenty of feasibility studies use a simplified rate adding the interest rate and line fee together but this could make a BIG difference to funding costs if your line fees aren’t accounted properly and you are only applying a simplified rate to drawn funds.
o With a 9% interest rate + 3% line fee as per the example above, your “real” rate on drawn funds might be closer to 15% or more – it depends on how quick you build and at what rate your loan balance increases.
o When some borrowers/lenders talk about a rate, it includes a line fee however it is very important to distinguish so you are comparing “apples with apples”
o For example, Interest rate of 9%pa plus a line fee of 3%pa. Some people might just add these together and quote a rate of 12%. That is a simple way to look at it as long as you understand that it’s far from accurate.
o Plenty of feasibility studies use a simplified rate adding the interest rate and line fee together but this could make a BIG difference to funding costs if your line fees aren’t accounted properly and you are only applying a simplified rate to drawn funds.
o With a 9% interest rate + 3% line fee as per the example above, your “real” rate on drawn funds might be closer to 15% or more – it depends on how quick you build and at what rate your loan balance increases.
