HoldenCAPITAL Director Dan Holden and Chairman Steve Wiltshire sit down to discuss their knowledge of residual stock loans. Refinancing product on completion is not as straightforward as most think. Banks have many fixed metrics that often prevent them from providing the type of loans a developer actually wants. This includes things like serviceability from day 1 of the facility, which is often not practical for small and even some larger developers, who rely on somewhat lumpy cashflows as they complete projects. Other limitations include the lenders concentration within any particular location, their general view of the market, the application of a lower gearing for a commercial loan rather than the 85% LVR that an individual investor loan typically gets without LMI. Another key factor is flexibility, which comes at a cost. Low cost funding options generally have all the terms favouring the lender, for example when a developer wants some proceeds from individual lot settlements, most low cost options do not allow for that.