Need time to sell your unsold stock
Residual stock finance, allows for funding of completed, but unsold stock in the development for a specified period of time, giving the developer time to sell the stock.
It is more beneficial if the developer has used private lenders or mezzanine finance and wants to refinance the debt, as this can reduce the interest payment and help the profitability of the development.
General situations for Residual stock facilities are:
- more time to sell stock
- higher LVR to allow for re-capitalisation to start another project
- higher LVR to allow for prepaid interest for the term
- cheaper rate
- existing lender needs to be paid out