Financing options becoming more limited
Property traders currently struggling to find the cash for short-term ventures may need to look further than in the past.
Wednesday, December 19th 2007, 8:30AM
"It's just going to get harder to get money next year, because there are more mortgagee sales happening now than there have been for years, the banks will be starting to bank more losses, and some of them are starting to curtail their policies to protect themselves in case the market comes back a bit."
"Many finance companies have simply stopped lending due to the current finance crisis," says Jacqui Ritchie, senior mortgage broker at Hybrid Group.
The weaker finance companies are currently being weeded out, says Ritchie, and "hopefully there'll just be a few really good, really strong finance companies left at the end of it, and in the interim that does make it tricky in terms of being able to obtain finance".
However there are still various finance options available in the tightening lending environment, she says, citing the example of her company having access to an 'asset lender' who has $20 million dollars to lend before Christmas.
"This asset lender is not debenture funded, hence the recent turmoil in the finance/debenture market has not affected their ability to lend. This lender is an asset-based lender. They do not test for serviceability; require proof of income or a clean credit history," says Ritchie.
The loan term through this lender would be from one to 12 months, have higher interest rates and fees than a standard mortgage, and is aimed at property investors, developers and traders – "People looking at purchasing properties to do them up and sell them to make some short-term cash on them".
| « Rates higher for longer | No Xmas cheer for borrowers » |
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