Background
Experienced property developers needed to refinance residual stock to complete nine near-finished rental units.
Over the past several years, they had built a diverse Auckland rental portfolio, including long-term government-backed leases that provided reliable, consistent income. Their adviser approached Avanti Finance to help release equity from an unencumbered investment property and support the completion of the project.
Challenges
- The loan required a high LVR at 80%.
- Part of the customers’ income was commission-based and had declined slightly year-on-year.
- Code of Compliance Certificates were still pending for the near-completed rental units, creating a short-term completion risk.
- The customers had a sizeable investment portfolio, requiring clear confirmation of rental income, debt levels and expense management.
Mitigants
Working closely with the customers’ adviser, we completed a detailed assessment of their income, rental portfolio, security position and debt reduction strategy. Several factors helped mitigate the risks identified.
Demonstrated income strength
- Income was assessed using conservative figures.
- Year-to-date income supported ongoing earning capacity for the most recent financial year.
- Uncommitted monthly income remained strong even under conservative servicing assumptions.
- The secondary applicant’s income was stable and consistent across multiple financial years.
Verified and diversified rental income
- All rental income was independently verified through rental statements, lease agreements, bank account credits, and rental appraisals from reputable property managers.
- Long-term government-backed leases provided secure income with reduced tenancy risk.
- Newly completed and renovated properties further improved rental yield and portfolio resilience.
Strong security position
- Security comprised newly completed standalone residential investment properties, supported by recent independent valuations.
- The combined valuations supported the requested loan amount at the proposed LVR.
- Properties were located in established Auckland suburbs with strong rental demand.
Well-managed debt and expenses
- Existing external lending was to be repaid in full of the proceeds of the property sale, reducing total liabilities and improving post-settlement servicing capacity.
- Credit facilities were minimal, with modest limits and primarily business-related use.
- No unsecured personal lending.
- Personal living expenses were assessed to be well managed.
Solution
Based on the assessment, Avanti Finance approved $1.13m in refinance funding over a 30-year term on a Principal & Interest basis, with the first two years structured as Interest Only.
The structure gave the customers the flexibility to complete the near-finished project while maintaining appropriate leverage and serviceability levels. Both applicants and their adviser were pleased with the outcome.
LOAN AMOUNT
$1,134,054
INTEREST RATE
6.60% p.a.
LVR
80%
TERM
30-year Principle & Interest
with the first 2-year Interest Only
“When an experienced developer reaches the final stretch of a project and needs to leverage residual stock to get it across the line, the right funding can make all the difference.
Our Property Investment Loan supports developers with post-completion funding needs for residual stock and long-term holding. We can consider higher LVR situations up to 80% for quality projects.
If you have customers in a similar situation, , reach out to your local Avanti BDM.”
Bridgitte Turner
BDM, Northland, Auckland North & West