PRE-DEVELOPMENT FUNDING

Client Scenario: This client, a small property developer, had approximately 50 per cent of the value of their land in debt with their bank, and they needed $100k to move the consenting and planning forward. However, it was difficult for them to show that they could service the mortgage from their salary, and the bank was reluctant to provide the required funds. Soon, the client realised that the approval process would take a lot longer than expected, with no certainty of outcome; so they approached us to get things on the move.

Merx Solution: At Merx, we have the capacity and appetite to support small developers and help them seize their property opportunities. As it’s often the case, we determined that the client would be able to service and repay the debt by developing the property and selling units. We provided the $100k funding on an agreement to mortgage (a caveat on the land), to be repaid in six months.

FIRST-MORTGAGE FUNDING

Client Scenario: Also in the property development space, this client had nearly finished one townhouse development and had contracted the purchase of another site for their next development project. They needed $600k to settle the land acquisition; however, the bank was reluctant to count the sale of the property towards the client’s capacity to service and repay the loan. And their salary alone was not sufficient to prove servicing.

Merx Solution: After confirming the viability of their project, we identified that they would be able to repay the loan through the property sale, as planned. Therefore, we provided the $600k they required as a first mortgage over the new site, plus a second mortgage over the existing site that had nearly been developed. This essentially allowed them to access the equity in their existing project and build their pipeline for future development work.