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90 Marine Terrace Fremantle, WA, 6160

Borrowing for a complex land subdivision

Not long ago, we settled on a tricky refinance and investment purchase that – yet again – reinforced the many reasons why mortgage brokers have earned such a solid reputation. 

The main character in this case study had been told “no” by a Big Bank subsidiary.

I say this emphatically: dealing directly with a bank can be severely limiting and potentially very costly. 

Let me highlight this through a brief case study:

  • Local client based in Subi owns a $1.8m home 
  • Loan with St George on the home
  • Called me (after seeing our YouTube ads and reading my book) wanting to get a competitive quote and learn how he can purchase an investment project without using any cash
  • The project involves subdivision into 5 potential lots (commercial in nature)
  • The client will complete headworks, subdivide and sell, retaining one lot
  • His accountant (a true professional who I introduced) suggested the property be purchased in a trust 85% and his own name 15% for future tax reasons
  • The project is located in North Queensland
  • The zoning of the project is rural/residential
  • The client has never completed a development like this before

If you’re a first time or wannabe developer, you probably don’t realise how tricky this scenario is.

The location of the project, the split ownership, the subdivision into 5, first development, etc. etc. meant that EVERY lender in the country, even their commercial divisions, did NOT want to touch it. 

Believe me, I know. 

We’ve been around for a while and completed hundreds of successful transactions so speaking to the right people wasn’t difficult. 

Even Bank of Queensland – a top ten bank and in the state where the project is, their commercial team would not take it because of the restrictions placed on developments in North Queensland. The other QLD lender of repute – Suncorp – said the same. 

What we ended up doing for this client produced a perfect outcome:

  • We ordered valuations on their home from 4 lenders
  • Secured a strong valuation on their home way above St. George
  • Bundled up their current mortgage into a very low rate P&I loan 
  • Created a Line of Credit (LoC) up to the remaining 80% of the value of their Subi home 
  • This was just enough to complete the purchase, cover all purchase costs and the costs of the development
  • The Line of Credit came in at a rate close to the P&I home loan Approximately half the price of commercial finance
  • We had finance approved and settled BEFORE they were due

The major benefits of this structure are:

  • The project is unencumbered – he can do what he wants with the property as no bank is holding the title as security
  • The ownership of the property is irrelevant – no bank needs to match up the ownership of the loan with the ownership of the property
  • He can draw down on the loan when he pleases, leaving the remainder in the LoC
  • He can repay the LoC at completion and what’s more, he’s got all the funds required for the next project without having to submit another loan application 
  • On top of this – and this is a very unique feature – after making repayments, he can move credit from the home loan “split” to the LoC split and use that too

This is the kind of stuff that gets a small handful of people VERY excited. 

We delivered a perfect outcome where we were able to use our product knowledge and expertise to get a tremendous result that met all the restrictions the client and his accountant had placed on the transaction.

Here’s the thing, you probably have no clue which bank offered this amazing outcome. 

Not many people do. HINT, it’s not CBA, NAB, ANZ, STG, MCQ or WBC.

Matter of fact, if you’re with a major bank and you’re “sophisticated” or have (or about to have) a complex scenario, being wedged into the policy of one of the major banks may be a handbrake on your wealth goals and plans. 

Obviously, I’m not about to tell you what lender we used. You would appreciate that we reserve that specialist knowledge for the use of our paying clients.

If you’re getting into property development for the first or fifth time and keen to learn more about this product and many more “hidden” loan products in the marketplace, request a 10-minute phone appointment with me ==>HERE

Don’t ever let a “no” keep you from your ambitions. 


Brodie Brown

Professional Mortgage Broker