The recognition New Zealand has gained for its management of the Covid19 pandemic is well deserved. Assuming the border issues don’t escalate, we’re at beginning of a recovery pathway, so what does this mean for the property financing market?
There’s no doubt that the lending sector has felt the impact, particularly in construction and development finance, however there is funding available for the right projects.
For some time, the banks had been focussed on existing clients and have required strong presales cover – something that was already a challenge pre-Covid-19.
Currently, 120% bank debt cover from qualifying presales (of which 90% needed to be to NZ residents) is the banks’ comfort-level.
Now the country is facing a recovery period, banks will be even more focussed on strong existing clients and buyers will likely be more difficult to lock into presales.
Bank development funding will be harder to secure but is still available for the right project.
While operating from home, Property Finance NZ successfully procured over $35 million of loan offers for clients during the 7-week Alert Level 4 & 3 period.
This included funding for new developments and for completed improved properties. There is non-bank funding available for projects and it is becoming increasingly more important.
Some non-bank lenders have more limited ability to lend due to the pandemic, however the majority are still operating and active.
Residential projects can be funded with as low as zero presales, and we can fund projects such as two-unit developments up to $20m plus.
Though non-bank funding is more expensive than bank funding, the comparison would rarely amount to an additional cost of more than $10,000 per unit, which is low when compared to the discounted pricing that may be required to pre-sell units.
If you have a project in mind or need to change the way you are financing a property, Property Finance NZ will deliver rapid turnaround and total visibility of your options.
Right now, we have in-house mortgage funding available for suitable deals so we welcome enquiries for any project and can help you navigate the best way to secure the right funding.