What is the core business of HoldenCAPITAL?

Most of our business is arranging construction loans via the major banks and non-banking organisations.

Did you know that in 2015, independent mortgage brokers originated 58% of Australian home loans? This has grown steadily from just 12% in 2002 and the banks have now become very reliant upon independent brokers to provide them with the bulk of their new business.

In 2015 HoldenCAPITAL was awarded #1 Commercial Broker in Australia by its industry peers. This award was based on settlement volume to qualify and then technical knowledge, proposal presentation and customer satisfaction in the final selection to become #1 in the country.


Aside from loans from Major Banks what other loan products can you assist with?

There is a significant range of mortgage trusts and private lenders providing construction facilities with terms and conditions that are far than the major banks demand, HoldenCAPITAL is actively dealing with over 50 of these funds providers currently. We are very strict on our criteria for lenders and who we will work with, having seen a variety of wild characters come into the lending arena over the past 10-20 years there is a few that will make promises and not deliver, leaving the developer stranded.

At HoldenCAPITAL our business was built on repeat and referral business so we are very motivated to not only see you into a loan but also see that you are safely out of it on the other side, so that we can work with you on your next project and the one after that. For details on current cost and gearing, see SEASONAL FAQ.

What interest rates and fees will I pay?

This will be determined by the fundamental metrics of the transaction and where it best fits from a funding perspective and by that we mean is it a bank deal or will it require funding from another source. We are accredited with a range of Lenders including all the major banks, non-bank lenders and large range of private lenders. Each lender will have their own pricing structure depending on the metrics of the transaction. Typically, once we have reviewed the information regarding a specific transaction, we will issue a Finance Consultancy Proposal outlining what we think are the achievable terms and conditions for a specific transaction, including pricing. Quite often we will include in our Finance Consultancy Proposal options depending on the Sponsor achieving certain milestones such as a level of presales that will be required by the lender. Also refer question 11.


Will my initial fee be refunded if the loan does not proceed? 

No. The HoldenCAPITAL team has a significant amount of experience in construction finance and part of our responsibility is to assess an application from the outset to determine whether it is a viable transaction. If the project does not appear to be viable, we will look for changes that can be implemented to make it so, however if we determine that this cannot be achieved will not issue a mandate or charge a fee.

We will only issue a Finance Consultancy Proposal if we think the transaction can be funded and from that point onwards we will work diligently to secure the best possible outcome for our client. Notwithstanding, there always instances where a satisfactory outcome is not forthcoming, however the initial fee charged covers our cost in packaging all the information available and preparing a professional submission to prospective lender/s and as such it covers our costs and is therefor not refundable.


Does HoldenCAPITAL lend it's own money?

Yes, however the bulk of our business is arranging loans for borrowers from the major banks and mortgage trusts. We do have a small fund, which is made up of private individuals and family groups who are sophisticated investors and they contribute money to be lent out via HoldenCAPITAL. These loans typically are categorized as follows;

  • A 1st mortgage on a development site to help the developer settle the land and get ready to start construction;
  • A 2nd mortgage on a development site to help the developer cover some final project costs like BA or presales marketing costs;
  • A 2nd mortgage on a development project for the period of construction, this is generally used by developers to minimize their equity contribution to allow them to conserve their capital and allow them to progress multiple projects at once;
  • A preferred equity or joint venture position for the period of construction, this can occur where we:
    1. Contribute project equity on a 50/50 basis with the developer, or
    2. where we take increased risk and therefore require increased reward, via way of profit share;
  • A reverse equity facility, which allows a developer to withdraw equity from a project which is under construction;
  • A residual stock loan facility refinancing unsold stock at the completion of a project.

What is HoldenCAPITAL's relationship with the banks and lenders?

HoldenCAPITAL has direct accreditation with all of the major and minor banks and most active mortgage trusts that offer suitable products to our regular requirements. Many of our competitors are not directly accredited but are bundled under an ‘aggregator’ who represents multiple independent brokers. In our view this adds another layer to the communication process which giving the broker less to do but leading to slower and more muffled communications. While this is fine for simple home loans, construction loans are a more complex and specialised product. As a result, HoldenCAPITAL maintains direct lines of communication with the key decision makers in the process to ensure optimum outcomes.

Some quick research will also show that many of the major aggregators are in fact partially or substantially owned by the major banks and as a result, getting impartial and unbiased advice is a risk. We would argue that your broker / consultant should work for you, rather than a company that is actually owned and/or run by a major bank.


I already have a relationship manager at my bank, why wouldn't I just deal with him direct? How would HoldenCAPITAL do any better than what I can negotiate myself?

You definitely can go directly to your bank and you may well obtain a largely satisfactory loan. However, to put that in perspective, as a professional developer would rather negotiate your planning permit yourself or would you engage an expert town planner who understood the local code and council preferences in order to get the best result?

We would argue that a smart developer would spend the relatively small cost of the Town Planner’s fee to tap into their resources, experience from multiple projects and relationships within the various approval bodies to save time and maximize the result. The difference is, would you like to get an outcome somewhere between what you are asking for and what the council would like to give you; or would you prefer the potential of an improved outcome drawing on the experience gained by a consultant who has had many hours of negotiations learning what is actually possible?


Can you help me with my boat loan or home loan?

No, we are a specialist ‘construction’ financier and do not service these sectors. While some of our competitors are all-rounders who dabble in lots of things, we only provide frank and specific advice for elite property developers.


I am building a duplex. Can you help me with my finance?

The property developers we generally work for are career property developers, often with at least 2 to 3 projects underway and a small team of people working for them. They are professional and elite property developers who make their living from successful property development and they chose to out-source the finance role to an expert knowing they will get the best advice and outcome for their project.

We also work for larger developers who do 500+ product per year and have 100+ staff. They also see benefits in out-sourcing their finance process because the cost of our service is easily recovered from the benefits of tapping into our market knowledge and knowing we deliver results. It also saves them time, which they can then use to focus on what they best at doing, which is sourcing and value adding to properties.


What does Mezzanine Finance cost?

For construction it can range from mid-late teens up to 30%pa dependent on the level of risk assessed by the investing party. Assuming a shovel ready deal with presales to cover a100% of the debt, a very strong sponsor, a reputable builder and great project metrics, this could provide a merit-based argument resulting in an interest rate that is sub 20%pa. However, in most instances we find that there are a number of factors where the borrower will require a greater level of reliance on the strength of the incoming investor, mostly of a financial nature.

For example, while their money is required prior to all the presales being in place and/or unconditional, the borrower’s remaining capital might be held by a spouse who is not a party to the loan and or in assets that are not readily realisable. Therefore the customer’s ability to access capital quickly represents a higher risk warranting a higher return to the incoming investor.


Do you provide credit enhancement? I have a great project but do not have the financial capacity and/or project track record to borrow that much money to do the project in my own right.

Yes, we regularly provide solutions to these types of issues. We can introduce a range of enhancements including:

  • appropriate capital partners to enhance the creditworthiness of the deal in order to secure bank / lender funding;
  • the introduction of experienced joint venture partners who can supplement the customers skill sets in return for a share of the project risk and rewards.


What does a non-bank lender charge?

  • For investment loans we have mortgage trusts and superannuation funds that can provide funds up to 80%LVR at around 5.5%pa.

When compared to current Bank terms of 65%LVR at just below 4%pa or 70%LVR at around 4.5%pa, this effectively provides a low cost equity redraw facility for the savvy property developer;

  • For construction loans we have a variety of gearing options that we can offer including major banks as well as options which DO NOT REQUIRE PRESALES;
    1. Land Sub-Division projects up to 70%LVR costing 12% interest rate and 3% establishment fees (broker and lender), loans up to $5mil
    2. Apartment and townhouse projects at 70%LVR costing 9.95% interest and 2.5% all up establishment fees, loans up to $5mil
  • Apartment and townhouse projects at 70%LVR costing 10.95% interest with 1% line fee, and 2.75% all up establishment fees, loans up to $10mil
    • Apartment and townhouse projects at 75%LVR costing 11.45% interest with 1.5% line fee, and 3.0% all up establishment fees, loans up to $10mil
    • Apartment and townhouse projects at 70%LVR costing 10.95% interest with 1% line fee, and 2.75% all up establishment fees, loans up to $10mil
  • For construction loans that do have some presales, we have some other funding options;
    • Apartment and townhouse projects at 70%LVR costing 5.7% interest with 3% line fee, and 1.2-1.8% all up establishment fees, loans from $25mil up to $100mil
    • Apartment and townhouse projects at 70%LVR costing 9.5% interest with 2.5% line fee, and 2.5% all up establishment fees, loans up to $100mil

The above is an overview of just a handful of loan products and there are over 50 non-bank lenders we work with, so please contact one of our team to discuss your project and what loan product s best suited for you.


Do you take referrals from other finance brokers?

Yes, however we will only accept a referral on the basis that HoldenCAPITAL assumes full control of the file with direct access to the borrower / decision maker. Construction finance is a very specialist area and to ensure the best outcome we require full control with the referring broker accepting an introduction fee in return for HoldenCAPITAL taking control of the file.


What do the banks pay HoldenCAPITAL for introducing business to them? 

The banks pay HoldenCAPITAL’s introduction fee and any trailing fees directly out of their own transaction establishment fee and interest margin. Further more, their transaction fees/margins are not “loaded” to account for the fees paid to HoldenCAPITAL, so there are no “additional” costs or undisclosed charges incurred by the borrower.


Do all lenders pay HoldenCAPITAL on the same basis?

Effectively yes. While the mix of establishment and trailing fees can vary slightly, there are only marginal differences in the levels of fees paid to HoldenCAPITAL between lenders and this has no bearing on how we place a transaction. Our best source of future business is our own client base and our primary motivation is to secure the best possible outcome for our client to ensure we will always be their first call when they start planning their next transaction.


How can HoldenCAPITAL sell my deal to the bank better than I can? 

It is not about “selling” the deal to just any bank. We achieve great results for our clients by tapping into our extensive relationships with our accredited financiers and using our intimate knowledge of their specific appetite for constructions loans to negotiate the best possible outcome.

At any given time, lenders requirements vary according to their exposure to the relevant sector, location, clients and other general financial and economic influences. As a result, knowing who amongst the various lenders can provide the most competitive options requires constant communication and maintenance of a comprehensive database to ensure that we are on top of where the best deals can be done.

It may be that the best option is our client’s house bank however, in many cases, what they will initially offer is the bank’s “preferred terms” rather than their best offer from the clients perspective. Our team uses their knowledge and relationships with the lenders to ensure that the client receives the best possible terms, regardless of the lender involved.


Why do I have to get a valuation when I have pre-sale contracts in place and a building contract and QS report? 

  • Almost all lenders require a valuation by a registered valuer acceptable to them and instructed by them as a matter of prudent lending, in order to satisfy themselves that their primary security can be relied upon. In some instances, we can arrange small short term advances by select private lenders who will accept a market appraisal or undertake their own but these are rare occurrences. Obtaining an independent valuation by an appropriately qualified 3rd party is a part of the lenders risk management process, which they must report on to the regulatory authorities.
  • Similarly, a satisfactory building contract from a reputable builder (usually required to be for a fixed price and time), provides the Lender with comfort that the product will be delivered as represented in the developer’s project cash-flow. Again this forms part of their regulatory risk reporting requirements.
  • QS assessments also fall into the category of regulatory reporting requirements for the major banks and are considered prudent by most other lenders. They also provide the lender with confidence that the delivery of the final product can be achieved at a cost consistent with the developer’s cash flow.


I want to get construction finance for my project but do not want to give my personal guarantee. Can you arrange my funding on that basis? 

No. All lenders require the sponsor to stand behind their project by way of a personal guarantee. Providing your guarantee is a signal to the lender of your confidence in the project and your ability to deliver it.


Why won't the funder accept all of my overseas pre-sales? 

Financiers want to see evidence of local market acceptance as part of their risk management assessment. In the event that these pre-sales did not complete for any reason and the financier had to step in, they would be marketed to the local buyers. Overseas pre-sales do not provide any form of evidence that the local market has accepted the product and price point.

For the same reasons, financiers will often put a limit on interstate purchasers but are likely to be more tolerant of interstate purchasers vs overseas purchasers.




What separates you from other mortgage funds?

We are not a mortgage fund where your money is pooled and invested without your knowledge or understanding. We run an “opt-in” process whereby opportunities are submitted to our investors and they can review a comprehensive loan summary and if they wish to “opt-in” and lend to the project, then a more comprehensive data room will be made available. If after that research they are happy to proceed then they send their funds to our solicitors trust account who will arrange the loan settlement.


Do you charge investors any fees?

No. The fees HoldenCAPITAL charge are costed to the loan, which is in turn covered by the borrower. There are no membership fees to the investor to join our exclusive mailing list in order to review these opportunities. There are no entry fees, exit or maturity fees, or costs relating to the establishment of our fund or for us preparing our PDS. These are all borne by the borrower.


Who is eligible to invest?

The AFSL we operate under only allows us to accept investments from parties defined by ASIC as “sophisticated investors”. You should obtain advice from your accountant or financial adviser to see if you qualify.


How do I invest?

Firstly you will need to meet the criteria and register to be a member. We will then send you opportunities as and when they pass our due diligence process and you can then decide if you like it and simply “opt-in”.


Do I have to co-invest and what if I want to do the whole loan myself? 

You can do either. We have some investors who only want to do the total loan with their own resources, while others may wish to co-invest. We can accommodate both options.


What is the role of HoldenCAPITAL in this process?

HoldenCAPITAL acts as a finance arranger and funds manager to the property development sector. We are specialists in this field and our team has decades of experience in this sector. HoldenCAPITAL originates loans for major banks, mortgage trusts and a select few private investors and is remunerated for settling loans and in some instance, managing them through to completion and repayment. Our motivation is to have sustainable growth in the successful repayment of loans so that our future business is an enjoyable experience for all. HoldenCAPITAL sources opportunities and introduces appropriate transactions to the Fund. HoldenCAPITAL’s fees are paid as a cost of the project by the borrower and are success based, the Fund does not pay commissions to HoldenCAPITAL.


Who decides which loans my money is invested into?

The individual Approved Lenders, we do not run a managed fund, the Approved Lenders elect to “opt-in” to each opportunity according to their own assessment of the risks and their appetite.


What is your due diligence process?

Our experienced team undertakes a thorough due diligence process utilizing their collective experience before providing Approved Lenders with a comprehensive assessment of the project and all related risks to enable them to determine if it meets their risk appetite.


What is the focus of HoldenCAPITAL?

We specialise in finance for the property development sector, which includes privately owned career operators who make their living and run a sophisticated business from property development.


What risks are involved in investing in property loans?

Typically the risks involved in property loans revolve around market, construction, sales and settlement risks. Our role is to identify and negotiate appropriate arrangements to mitigate the risks to a level that allows the Approved Lenders to make an informed decision having regard to the risk versus reward opportunity.


Who is my point of contact on-going?

The Fund Manager


How often will I get updated on my investment?

Typically quarterly updates will be provided to the Approved Lenders, but more regularly if there are important updates to relay to be relayed to them to ensure that they can make prompt decisions to protect their interests.


Is interest paid monthly, quarterly or on completion? 

Typically upon completion, however each deal is structured differently and occasionally interest may be paid in advance or monthly.


What returns can I expect?

These can vary depending on the specific project metrics but typically they can reflect the following targeted returns:

  • for a 1st ranking mortgage security that passes our due diligence criteria the lender could expect 11-14% per annum;
  • for a 2nd ranking mortgage security that passes our due diligence criteria the investor could expect 16-24% per annum;
  • a joint venture equity position that passes our due diligence criteria could provide the investor with a profit share target IRR of 30-60% per annum.


How are you different to the mortgage funds that lost money in the 2009 Global Financial Crisis? 

There were a number of lessons that arose from the GFC for financiers generally which include;

  • Pooled mortgage funds tended to become a machine that focused on maintaining yields to attract investors and as a result, enhance the Fund Manager’s position and income stream, rather than focusing on the integrity and risks associated with the individual transactions;
  • Investors were attracted to the returns but found that a Funds performance could quickly become impaired by one bad transaction which could erode their past income gains and even their capital with little or no ability to cash out; and
  • Transparency of what the fund manger was earning for doing their job well was often difficult to determine;

HCAP Invest provides opportunities that are not pooled and are presented to Approved Lenders with full disclosure enabling them to make all key decisions relating to their capital invested into the individual projects. The Fund Managers returns are paid as a cost of the project are determined up front and success based. As such, the borrower cannot influence them during the course of the project.


What is the growth plan for HoldenCAPITAL?

As at 2016 we view that between $100-150mil would be the optimum level of total funds for us to have under our oversight. With the typical life span of these loans estimated at 9-18 months, this means we need to source, analyze and present around $150-200mil of opportunities per year to maintain that level of funding. Even if we were offered access to $300mil tomorrow we know that there is not enough quality development opportunities in our market place for us to consistently place that volume of investment money in transactions with acceptable risk reward profiles.


Why should I invest my money with a property developer when I could do it myself? 

HoldenCAPITAL has access to a constant stream of transactions from a broad range of developers as well as the skills to evaluate and eliminate those with inferior risk profiles. As a result we provide Approved Lenders with an ability to leverage off our extensive property experience and robust due diligence procedures to access those lending opportunities.


Can you explain what involvement HoldenCAPITAL will have throughout the life of the loan?

HoldenCAPITAL’s role will vary according to the wishes of the individual Approved Lenders. Typically our involvement would involve the provision of loan management oversight entailing the regularly review of the loan’s progress and liaise directly with the Developer, Builder and Marketing Agent on behalf of the Lender to ensure that the transaction remains on track with projected project metrics meeting the expectations provided by the borrower at the commencement of the facility.


Can you tell me about the team and why they are qualified to source and analyse these types of deals and manage them through to successful completion and repayment?

Refer Team profile under “About” on the HoldenCAPITAL website.


Will you invest in residential even when the market is described as "cooling"?

Yes, selective residential opportunities will still be available during all phases of the market if we determine that the merits of the project meet our criteria for a sound investment risk.


Because HoldenCAPITAL is the originator of the transaction, should I be worried that they are just motivated by fees to push deals through the due diligence process? 

HoldenCAPITAL’s fees are structured to be payable upon the success of the project, which aligns our interests with those of the investors.


Can I sell out of an investment prior to it being repaid?

No. Each transaction is stand-alone and requires the Approved Lender and Borrower to remain committed to the transaction until the successful repayment of the loan. Investing in a mortgage is not deemed to be a liquid investment like owning shares in a listed Company or Fund.


What information can I expect in the data room?

When you sign up to be an Approved Lender, we will provide you with access to an example data room where you can see the level of information we provide on a transaction for review prior to making a decision to proceed. We will also answer any additional questions you may have relating to the due diligence undertaken when assessing a potential loan.


Is your mortgage fund geared?

No, because each mortgage is done in isolation there isn’t the scope to gear it with other cheaper cost funding. Therefore if we have a $5,000,000 loan opportunity we will place the entire amount with funds from Approved Lenders


How do we find our investors?

  1. Repeat business and referrals are our primary source of attraction Approved Private Lenders. We have a handful of Lenders that have been with us for many years and who have grown the level of their investment with us with each successful transaction. Some testimonials include;

“Dan and Pete have managed a loan that I invested into for the past 18 months and they are always prompt with actioning items and have a finger on the pulse of the project, protecting our interests.” – Paul

“We have invested in numerous loans with HoldenCAPITAL as our loan manager. They take the guesswork out of the process and prepare everything to allow me to make a quick decision. Our family office will happily keep investing in their loans going forward.” – Shane


If a loan defaults or becomes a problem loan, who makes the decisions regarding it's future?

This will depend on the number of Approved Lenders participating in the loan and the level to which they delegate the day-to-day management of the transaction to HCAP Invest. But typically the key decision making process will be as follows:

  • Where you are the sole Lender you will be able to make any and all decisions relating to the management of the account; while
  • Transactions involving more than one investor will require the parties to jointly manage their exposure.




Do I have to pay the loan establishment fees from my own pocket?

The majority of the loan establishment fee for both the HoldenCAPITAL brokerage fee and the lenders establishment fee will be paid from the loan facility, there is often an upfront work fee or commitment fee payable from your own pocket, this amount varies depending on the loan.


Can I put in my equity requirement throughout the project?

In most cases no. In rare cases the lender will let you cover some costs progressively, however standard practice is to have all of the borrower’s equity required for the deal to be invested first, allowing the lender to fund on a cost to complete basis from their approved loan facility.


Do I have to pay any bills along the way or does the loan cover anything?

All project costs listed in the funding table can be claimed under the loan facility but there are a few circumstances where you may have to pay a cost such as;

  • A bill is required to be paid prior to the scheduled monthly facility draw down. The amount can subsequently be recovered under the draw subject to appropriate paperwork and certifications;
  • The facility may not have a specific GST facility allowance requiring developer fund the GST portion of all bills each month pending recovery via their BAS claim BAS;
  • A cost arises outside of the pre-determined project costing and you elect or the lender declines the claim under the project contingency.



(Please note the date of the comment so as to put it in the proper context of the market cycle)

How do I know that a non-bank lender will always have the funds for my project?

A: this is a common and reasonable question. With the Major banks reducing their appetite there has a been a proliferation of new lenders into the market place (we’ve listed 100+ new entrants in the past 2 years), which are reliant on investor funds that can ebb and flow with market sentiment. However, there are many lenders who have long and exemplary records of lending in our sector. The key is that like the banks, these lenders have achieved this by understanding the risks involved and having well-structured lending criteria which has earned the trust of investors ensuring a consistent supply of funds, not unlike the banks. So, if you want to find out more about these lenders talk to your HoldenCAPITAL consultant and remember, if you hear about a new lender offering cheap money that sounds too good to be true, it probably is.


How many presales do I need to get funding?

A: The answer to this question is that it depends, on a lot of factors!! While it is frustrating for us all, there is no simple answer to this question as it depends on many other factors and yet it is also a critical decision as it can mean the difference between starting construction now or having to wait and risking having to make sales in a market that may have changed. There are many lenders who do not require presales in order to fund a project but in order to do so you will need to satisfy various other requirements such as having the right product for the location, the necessary experience, sufficient capital invested etc. In short, presales can both help or hinder a project, the key is understanding which lenders require them, what’s an appropriate level and what actually works best for your project. HoldenCAPITAL’s consultants can help you navigate these questions to secure the best solution for your needs.


Why should I pay a commitment fee and sign an exclusive mandate?

A: In this world of free enterprise, keeping your options open to get the best possible solution makes good sense and provided you have the time and or money, there is nothing wrong with having multiple strategies at work. Equally, you get what you pay for and there are many advisors only too happy to take a fee for introducing you to lenders. The key is you don’t need an introduction, you need a result. HoldenCAPITAL has been Australia’s best Commercial broker for the past three years running* against all comers but we only undertake construction finance, nothing else. We have achieved this recognition because we are dedicated to ensuring our clients get the solution that best suits their business needs. So, if you want to work with the best come and talk to our team of experts with a combined experience of over 170 years in the business of construction funding.