Background
A single man aged 74 wanted to purchase a section in a provincial city to move a relocatable dwelling onto it. He was planning to sell the property once the dwelling was relocated, services connected, and code of compliance issued.
Challenge
- Mainstream lenders were not prepared to assist due to the client’s age
- The section did not have services connected
- Avanti Finance is not a construction development funder (case-by-case on as-is value).
Mitigants
- Client had PAYE income and received NZ Superannuation
- Demonstrated ability to meet interest-only costs
- Previous lending with Avanti with good account conduct and met expected exit
- Good credit profile
- Relocatable already purchased and paid for, with transportation included
- Quotes for further works provided and funds to complete evidenced
- Lending based on land value only to 70% LVR.
Solution
Avanti provided a short-term, 2-year interest-only loan (first mortgage). Due to the construction element involving the relocatable, we could not consider this under our long-term mortgage options.
- Loan amount: $172,680
- Adviser fee: $3,000 (for loans under $300,000, the adviser can charge a max fee of $3,000 that can be capitalised)
- Avanti fee: $1,680
- Interest rate: 10.10% p.a.
- LVR: 70% based on land-only value
We were comfortable with the exit plan to sell the property once fully completed. Lending 70% LVR was based on the purchase price of the section and an RV was requested to support the value.