Meets growing demand from brokers wanting to diversify
Growing numbers of mortgage brokers are looking to diversify into construction lending, and non-bank lender Assetline Capital has responded by launching a new alt doc construction product.
The new product is aimed at borrowers who require construction loans from $1 million to $5 million, with 70% LVR for a period of up to 18 months.
Assetline Capital’s alt doc construction loan provides funding for company and corporate trust borrowers for the ground-up construction of houses, duplexes, townhouses and for structural renovations.
With no/limited presales or servicing required, the product is designed to deliver an alternative and reliable funding opportunity for borrowers wanting to do small developments.
Assetline Capital head of sales and distribution Royden D’Vaz (pictured above) said with the appetite for construction lending within the broking industry growing steadily, the new finance product was a good segue into the construction space for those brokers who might not have experience in this area.
“I would encourage brokers who are unfamiliar with construction lending to look at the opportunities it may bring to their business,” D’Vaz said.
He said Assetline Capital had also received feedback from many brokers who wanted to diversify their business with construction lending solutions but did not know where to start.
“Unlike construction products with larger loan amounts, Assetline’s alt doc construction has a simple five stage drawdown process that clearly documents what’s required from the borrower at every stage, (e.g. installation certificates) including the percentage of payments issued,” said D’Vaz.
“So far, our initial broker soundings have been very positive with borrowers valuing the speed, flexibility, and construction expertise of our team.”
Factors driving demand for alt doc construction product
Since 2018, there had been huge industry changes, said D’Vaz, including COVID-19, rising builder insolvencies, supply chain disruptions and increasing costs due to inflationary pressures.
“These factors changed the demands of borrowers, and a number of them reached out looking for loan amounts between $1m and $5m,” he said.
“We trialled the product with several experienced construction brokers and borrowers across the country last year and worked with them to create a product that not only filled the gaps of the current market but was simple and effective to use.”
D’Vaz said initial deposit to structure and finishes, the borrower had access to Assetline’s experienced construction project monitoring team to provide regular updates and certificates of compliance to ensure that the project was running on budget and schedule.
The alt doc construction product is available across all eastern seaboard states in metro locations and is part of the non-bank lender’s extensive offering of construction solutions.
“We understand that there is no ‘one size fits all’ product when it comes to construction
funding needs, which is why we have many solutions available from partially completed to
development exit to large construction funding of up to $40 million,” D’Vaz said.
Helping brokers diversify into construction lending
Construction lending may seem daunting to brokers compared to other commercial loan options, but with the right lender, and the right support, it can be a straightforward and rewarding process for both the broker and borrower, said D’Vaz.
“We have a dedicated construction project management team that provides hands-on support through each project, development, and deal.
“They come from all aspects of the construction industry, including registered builders, quantity-surveyors, and engineers to provide useful knowledge and guidance in getting the deal over the line. Our national sales team are also on hand to workshop scenarios with brokers to find the right solution for their client.”
D’Vaz said Assetline Capital had been a market leader in the $5m to $40m construction lending space since 2018 and had settled over $1bn in construction loans since, “so it was a natural progression for us to launch this product”.
“We’ve seen more brokers get in touch wanting to learn more about construction lending, how to workshop a deal and the various construction solutions that are available like Partially Complete or Development Exit,” he said.
“Due to this growing appetite, we are hosting an educational webinar on construction lending on March 13, details can be found here.”
Assetline Capital, which is part of the AltX Group company, and has offices in Sydney, Melbourne, and Brisbane, recently boosted its presence in Western Australia and South Australia, with the appointment in August 2023 of Stacey Madejewski as business development manager for those two states.
In March 2023, another 5,000 brokers gained access to Assetline Capital’s lending solutions when the non-bank was added to LMG’s lending panel.