Mortgage Broking for Residential Developers

Residential developers are a rare breed in New Zealand, as they need to have a high degree of confidence that the houses they build are going to sell quickly and for a good price. They need to have a very good team around them including urban planning specialists, very good architects and very good builders and landscapers. Click here for Nelson mortgage brokers.

Sarah Watts, mortgage broker at MortgageBrokersNZ.org

Once a residential development company gets this good team then they can become extremely successful, and there are a number of development companies up and down New Zealand they have been well known and successful even for decades. Generally the leadership of these companies is dominated by one or two very experienced developers who deeply understand the residential housing market in their areas, and have extremely good connections with the local council including the urban planning and consenting departments and the political leaders. This will ensure that the developers know where the market opportunities are in their local area, and what the planning requirements are and what they need to do to avoid any problems. Good developers work to a steady process where they have a number of projects on the go at the same time but at different stages.

One very important member of their team will be the specialist mortgage broker who makes sure that the appropriate finance is available at the appropriate time for all the projects. This can be quite complex where a number of projects are on the go, as the financing will need to work around the various stages of each project up to the time in the house is sold and paid for. Successful developers may even have sufficient cash reserves that they can finance their own developments, although many may prefer to borrow the development funds rather than risk their own money. The financing the mortgage broking obtains may be temporary finance that last as only long as each project, or it may be a more permanent large fund that can be used like a very large bank account with a large overdraft.

The specialist mortgage broker can also win business by providing finance to the new homeowners who are purchasing the properties, and so this role can potentially be extremely lucrative. A very good mortgage broker who keeps the developer very happy can also find themselves being the go to mortgage broker for the developer’s real estate agent. Interestingly for the mortgage broker, their income is from commission only, but the size of the commission for a mortgage for a modern new home can be well over $3,000, and yet may only require 2-3 hours work.

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