Frequently Asked Questions

We typically provide loans between $2m and $10m, although can consider loans outside of this range.

Our loan terms are typically up to a maximum of 24 months.

Most of our loans are backed by a first registered mortgage over the property for which the funding relates to the purchase or development of. Additionally, we require a general security agreement (‘GSA’), personal guarantees from the sponsor(s), and a specific security agreement (‘SSA’) which includes an assignment over things such as plans, consents, insurances and pre-sale contracts.

Yes, we can consider providing loans secured by a second mortgage, sometimes referred to as “mezzanine” or “mezz” funding in property developments, as it is a layer of funding that sits between the senior funder and the borrower’s equity. Second mortgages are riskier than first mortgages, so they are priced at a higher finance rate. We typically only provide second mortgage funding where the first mortgage holder is a main bank, and where we have an option to buy out the first mortgage holder’s position at our election or in the event of default.

We treat each deal on its merits – therefore we do not have a maximum LVR threshold. LVR is just one of the many factors that make up a loan. Other considerations include the type and location of the property, capability and financial strength of the borrower and feasibility of the property development including the level of pre-sales. The stronger these things are, the more likely we’ll be able to fund a higher LVR.

We do not have set or advertised rates. Our loans are priced based on several factors such as security being offered, experience of our borrower (in particular for developments), feasibility of the project we are funding (including presales and borrower’s equity) among other factors. For development loans we typically charge an upfront finance fee, plus a line fee and interest. For a bridging loan or land bank facility, we charge an upfront finance fee and interest.

We typically offer fixed interest rates on our loans. We can also provide floating interest rates by mutual agreement, which are repriced each month according to changes in the underlying bank bill rates.

It depends on the nature of the deal. For development loans, interest is typically capitalised to the loan balance throughout the project and paid at the end when the loan is fully repaid. For other types of loans – land banks and bridging loans – interest may either be capitalised, fully serviced or partially serviced with the balance being capitalised to the loan. Typically, if there is a recurring income coming from the property being funded (such as monthly rent), this would be paid to us to help service interest.

We can typically provide indicative appetite within 48 hours of receiving an application – as long as a reasonable level of information is provided. We act quickly to turn applications around and, in some circumstances, have had loans drawdown within just 10 working days of first receiving the request.

This depends on a few factors, including:

• Nature and scale of the construction project
• Nature of the developer-builder relationship and the construction contract
• Developer experience and capability
• Loan to value ratio

In summary, we take a practical approach when considering the need for a lender-appointed quantity surveyor in a project. We have good relationships with property professionals across New Zealand and will always look to appoint a QS who is fit for purpose for the particular project.

Generally, we require a registered valuation of the underlying security. Where an acceptable level of presales has been achieved, we may be able to accept these as a substitute.

We don’t have a specific panel for property professionals but prefer to use reputable individuals and firms who we know will be the right fit for the job.

Pre-sales can play an important role in development funding as they help establish market acceptance for what is being developed and provide a pathway to repaying the loan once the project is finished. Pre-sales can, however, mean that you forego the potential for achieving higher sale prices on completion, particularly in a rising property market. Each development is unique. We understand that it is all about finding the right balance of pre-sales versus maximising the value of the project. Where there are strong mitigating factors, we can relax or reduce the requirement for pre-sales, allowing your development to get underway.

Where we require pre-sales on development deals, our standard requirements are that they include the following:

• Unconditional contract on arm’s length commercial terms
• Minimum 10% deposit held in a solicitor’s trust account
• Sunset date no earlier than 24 months from the date of advance
• Settlement to occur within 10 days after the latter of practical completion, code compliance certificate, or provision of titles
• Sales to companies or trusts to be personally guaranteed

We are able to consider pre-sales that fall outside of these parameters on a case-by-case basis.

Borrower equity in a project is important as it ensures there is ‘skin in the game’. Typically, we require that borrower equity is introduced as cash, or equity in property that has been built over time, as opposed to obtaining a valuation for a higher value than what you’re paying for a property you’re about to settle. If you’ve owned a property for a reasonable amount of time, then the value uplift can be considered as equity.

The CCCFA is the Credit Contracts and Consumer Finance Act 2003. The CCCFA ensures that when money is loaned to a borrower for a personal or consumer purpose, they can make informed choices, know what they are agreeing to, and can keep track of their debts. Killarney Capital does not provide consumer credit contracts. All our loans are provided for business or investment purposes, meaning they are not subject to the consumer lending provisions of the CCCFA.

Yes, we fund projects right across New Zealand – including all the major cities and beyond. We’ve previously funded projects in Whangarei, Te Puke, Taupo, Palmerston North, Woodville, Pahiatua, Carterton, Rangiora, Oamaru, Wanaka, Cromwell & Alexandra to name just a few!