CONSTRUCTION FINANCE
Client Scenario: Around 18 months ago, this client – a small property investor – bought a section with a plan to build on it. They have the funding in place to settle the purchase on the land, but they haven’t been able to access the funds they need from their first mortgage provider, to finance the construction of the house. The bank was not willing to step in just on the basis of the future value of the property, so our client had two options: 1) sell the section or one of their other existing properties to fund the construction work or 2) raise the construction finance from us.
Merx Solution: Understanding project finance allows us to take a more sensible approach when it comes to this type of scenarios. Essentially, we rely on the value of the completed project and provide the funding to bring it to the finish line, sharing the risk it takes to get there.
In this client scenario, we’ll fund the construction to the end for a total of $500k, secured by a second mortgage and the client’s portfolio of investment properties. Upon completion, they will have the choice of either selling one of their properties or refinancing it.
BRIDGING FINANCE
Client Scenario: This client, operating in the childcare sector, had a new investment opportunity ahead of them and wanted to fund the initial stages of a new childcare centre development. However, due to lumpy cash flow and the specialised nature of their property assets, the bank was not willing to back their plans.
Merx Solution: Once again, by taking a pragmatic approach to this client’s finances, we were able to look past the specialised quality of their childcare assets and discontinuous cash flow. We provided the $250k bridging finance facility they required, secured by a combination of a second mortgage over their existing property and well as second GSA over their business. The client looks to repay Merx either on the sale of the first childcare centre or on the successful outcome of the new investment.