Frequently asked questions
What is the Funding Finder?
Funding Finder is a searchable database of lenders and lending products (including a few equity products) offered in the Australian market by private, non-bank lenders. We believe it’s the most complete, most extensive such database in the country.
Funding Finder is owned by The Funding Doctor, a firm in the business of introducing borrowers and lenders.
At the moment, the Funding Finder database contains approximately 300 lending products, with more being added every day. The majority of these products are geared towards construction finance and asset-backed short-term lending.
Our mission is to disrupt the private lending market in Australia, to make it transparent, and to drive financing costs down by fostering competition between lenders.
What are the main purposes of Funding Finder?
First, to give you information about what funding possibilities are available in the market.
Because many lenders are private individuals or small firms who lend on an ad hoc basis, it is impossible to definitively capture every lending possibility in the market. Nonetheless, our goal is to make the database as complete as possible, or at least to make it more complete than any other database.
One of our main motivations is to get rid of the old “bait-and-switch” model that many finance brokers use with clients – they tell you they can get you a super cheap rate, but when the actual offer comes through, it’s considerably more expensive. By the time you understand what’s happened, you don’t have time to find a better rate. It may be that that rate never existed, that the higher rate is the best that was ever going to be offered. We think the client has a right to know that up front.
A related problem is that you can never be sure there’s not a better deal on offer somewhere else – what we call the “monk over the hill” problem. With a market that’s so opaque, how do you know what’s really available? Is your broker or lender telling you the whole truth, or just giving you the facts they want you to have, the ones that make you sign their deal? It’s really hard to know.
So, we do what we can to give you more insight into what the market has to offer.
Our second purpose is, using the better knowledge we give you about what’s available in the market, to allow you to choose with confidence the most competitive rates and terms.
How does Funding Finder work?
Based on the information you input, Funding Finder uses a computer algorithm to match you with the lending products that are available for your project or loan type.
The more information you give the algorithm, the more accurate the matches are. That’s why you see the number of results going down as you answer more questions – when the system knows nothing, it assumes all products are available; as it learns more, it excludes the products that don’t match and would just be a waste of time.
Once you’ve seen what’s available, you can decide if you want to proceed with an application. UNTIL YOU GIVE US PERMISSION, YOUR INFORMATION IS COMPLETELY PRIVATE AND CONFIDENTIAL. Neither we nor any lender will contact you and no information about your deal will be sent to any lender, until you tell us it’s ok to do so.
In fact, until you provide us with contact information at the very end of the online application form, we have no way of contacting you.
If you decide you do wish to proceed, you can either (A) ask us to contact you to discuss the options that are available or (B) you can fill out the information required by the system and submit it electronically.
For many loans – particularly construction loans for projects that are fairly straightforward – this second option will reduce the fees we charge by approximately 50%. Thus, if our fee would normally be 0.40%, we will only charge 0.21% if you fill in the information requested.
The reason we do this is simple – it saves us a lot of time and effort if you input the information we need, and we’re happy to share those savings with our clients.
Whether you fill in the information on line or give us the information as part of a direct discussion, we review that information and submit it to the lenders that Funding Finder has identified as having products that match your lending needs.
Again, none of this happens UNTIL YOU GIVE US PERMISSION TO SHARE YOUR INFORMATION WITH THE LENDERS.
Once we submit the information to the lenders, they give us a preliminary indication as to whether they’re interested in the deal and what their indicative rates and terms would be (usually the same or very similar to what is outlined in the Funding Finder database). This usually happens within 24-48 hours.
We communicate the lender feedback to you, including sharing any indicative letters of offer we’ve received.
If you agree to one or more of the offers, you’d sign it and then begin working directly with the lender to complete their due diligence process.
Once the loan settles, The Funding Doctor receives a fee, as described in What fees do you charge? below.
What fees do you charge?
We generally aim to charge around 1.0% of the loan balance as a brokerage fee. Brokerage fees are generally higher for short-term loans than for construction or commercial loans. As a percentage, fees are generally higher for smaller loans than for larger loans.
Why can’t I see the lenders’ names? What is with the 3 letter aliases?
The way The Funding Doctor makes money from Funding Finder is by charging a referral fee, which is calculated as a percentage of the loan amount (see What fees do you charge? above).
If we made the names of the lenders public, many users would simply go directly to the lender, leaving no income stream for Funding Finder.
Also, business loans of the type listed in the Funding Finder database are complex, bespoke contracts between the borrower and the lender. Funding Finder attempts to describe the lenders’ offerings as accurately as possible, but we do not want to give the impression that a lender is guaranteeing a particular rate or set of terms – there may be reasons why the loan is more or less risky than what the information captured by Funding Finder would indicate, and the lender will make their own assessment and adjust their offer accordingly.
The three letter aliases are a way of keeping the lenders’ names private until such time as they issue a letter of offer to the client. At this point, the lender’s identity becomes known to the client, and the client and the lender deal directly with one another.
Are you a lender?
No, we are not a lender. We are only referrers, matching clients with funding needs to groups that have money to lend or to invest.
We also do not give financial advice.
Definitions and concepts, with commentary
1st Mortgage. A first mortgage is the primary or initial loan obtained on a piece of real estate. The primary-mortgage lender has the first lien or right to the property should the borrower default. “1st mortgage” is also used as an adjective to describe senior debt, as in “1st mortgage loan.”
1st Mortgage Loan. A loan which has 1st mortgage security over the property being used as collateral. Synonymous with Senior Debt.
2nd Mortgage. A second mortgage is the subordinated or secondary loan obtained on a piece of real estate. The primary-mortgage lender has a lien or right to the property should the borrower default, but only after the claims of the 1st mortgage holder have been satisfied. “2nd mortgage” is also used as an adjective to describe senior debt, as in “2nd mortgage loan.”
2nd Mortgage Loan. A loan which has 2nd mortgage security over the property being used as collateral. Synonymous with Mezzanine debt.
A&L. See Assets and Liabilities Statement.
“As if” Value. The “as if” value of the site is the value that it would sell for after the site has been developed. This should be the same as the Gross Realisable Value.
“As is” Value. The “as is” value of the site is the value that it would sell for today. If the site is being purchased, the “as is” value is the same as the purchase price.
Asset-backed Loan. A loan secured by one or more assets, usually property.
Assets and Liabilities Statement. A statement listing the significant assets and liabilities of a lender or guarantor. This is usually a very significant element in a lender’s evaluation of a loan application for two reasons. First, lenders want to see if the borrower has financial means beyond the primary loan collateral (e.g. the development site) to satisfy any potential shortfall in the loan repayment. Second, lenders use the assets and liabilities as a way of evaluating the business acumen and financial standing of a potential borrower.
Broker. A person or firm who sources borrowers and locates funding for them.
Brokerage Fee. The fee charged by the Broker for sourcing the borrower and locating funding. The is charged as a percentage of the Gross Loan Amount. For instance, if a broker charges 1.5% Brokerage Fee % on a Facility with a Gross Loan Amount of $2,000,000, the Brokerage Fee would be $30,000.
Brokerage Fee %. The percentage charged by the Broker for sourcing the borrower and locating funding. The benchmark for Brokerage Fee % is 1.0%. Brokerage fees are usually higher for smaller loan amounts and for loans that have short settlement deadlines. See also “Brokerage Fee”.
Capital Stack. Capital stack refers to one of the following 5 funding types:
Senior debt
Stretch senior
Mezzanine
Preferred equity
Equity
Position in the Capital Stack is determined by the priority of pay off: senior debt is paid off first, equity is paid off last.
Capitalise. To include into the balance of a Loan Facility. For instance, if a facility has Upfront Fees of $100,000 and the Borrower elects to Capitalise the fees, the Lender will pay the Fees to the appropriate parties and add $100,000 to the balance of the loan. The practical effect of this is that the Borrower doesn’t have to pay the Upfront Fees until they pay off the Loan Facility. The opposite of Capitalise is Service.
Capitalised. Included in the balance of a Loan Facility. For instance, if a facility has projected Interest Expenses of $100,000 and projected Line Fees of $100,000 and the Borrower elects to include the Interest Expense and Line Fees in the loan balance, the combined $200,000 is said to be “Capitalise.” The opposite of Capitalised is Serviced.
Capitalised Fees. Any Upfront Fees that are financed by the lender as part of the Gross Loan Amount. For instance, if a facility has Upfront Fees of $100,000 and the Borrower elects to Capitalise the fees, the Lender will pay the Fees to the appropriate parties and add $100,000 to the balance of the loan. The practical effect of this is that the Borrower doesn’t have to pay the Upfront Fees until they pay off the Loan Facility.
Capitalised Interest. Any Interest Expenses and Line Fees that are financed by the lender as part of the Gross Loan Amount. For instance, if a facility has projected Interest Expenses of $100,000 and projected Line Fees of $100,000 and the Borrower elects to Capitalise the Interest Expense and Line Fees, the Lender will allow $200,000 to accumulate as part of balance of the Loan Facility. The practical effect of this is that the Borrower doesn’t have to pay the Interest Expense and Line Fees until they pay off the Loan Facility.
Caveat. A notice, especially in a probate, that certain actions may not be taken without informing the person who gave the notice. Caveats are frequently encountered on properties where a person or entity has registered a claim on the proceeds of any disposition (e.g. sale) of the property.
Caveat Loan. A loan secured by a caveat against a property or other asset. Caveats are not as secure as mortgages, and caveat loans are generally considered to be the riskiest and most expensive type of asset-asset backed loan.
Commercial Loan. A medium- to long-term loan on an improved asset, as distinguished from a Construction Loan (financing the improvement or building of an asset), Land Banking (financing of an unimproved piece of land), Residual Stock Loan (a specialised term loan financing recently completed but yet-to-be-sold improved property assets), or Short Term Loans (a specialised term loan with a term less than 12 months).
Construction Certificate. A certificate that is issued by an accredited private certifier or a consent authority. Construction certificates allow construction to start and are usually one of the last permits to be issued on a development site. Lenders will sometimes not proceed with a loan application, and will virtually never settle on a construction loan before the construction certificate has been received.
Construction Loan. A loan specifically for the purpose of financing the construction or improvement of a real estate asset.
DA. See Development Approval.
DA Approval. See Development Approval.
Date of Valuation. The date on which a Valuation Report is issued.
Development Approval. The regulatory approval that must be obtained prior to commencing a development. The DA authorises assessable development to take place. Approval is issued by the local government authority - with or without conditions or not approved. Many lenders will not grant land banking loans or construction loans until development approval has been received. If DA has been received, they will want to review the DA, to ensure that it will accommodate the development being contemplated.
Drawdowns. Funds drawn from a loan facility.
Equity. (1) The portion of an asset that is owned free of debt. For instance, if a property valued at $1M has a $700k mortgage against it, the owner is said to have $300k of equity in the property. (2) The lowest level security interest in an asset. Equity is paid out only after all debts and preferences (including preferred equity) are paid out.
Establishment Fee. The fee charged by a lender to set up a new loan. Establishment fees are typically 1.0% to 2.0% for most loan types other than Short Term Loans and for loan balances over $2.0M.
Estimated Financing Costs. Estimated Financing Costs is a combination of all interest and fees that will be charged over the life of the loan. Estimated Financing Costs includes an estimate of Establishment Fee, Brokerage Fee, Funding Finder Fee, Line Fee and Interest Expense. These fees are estimated based on the size, type and term of the loan, as well as the interest and fees charged by the lender.
Fee. A fee refers to any amount of money charged by the Funder other than interest expense.
First Mortgage. See 1st Mortgage.
First Mortgage Loan. See 1st Mortgage Loan.
Folio Number. The distinct lot and deposit/strata number that is specific to your individual property. The folio identifier will appear on the Certificate of Title. Folio numbers help Lenders see exactly which parcel of land is being used for collateral.
Funder. An entity providing debt or equity financing to another entity. On this site, the term “Funder” is often used interchangeably with the term “Lender.”
Funding Finder Fee. The fee charged by the Funding Doctor Pty Ltd for successfully matching borrowers and funders.
Gross Realisable Value. The value (net of GST) of the development stock upon completion of the project.
Gross Realisation Value. See Gross Realisable Value.
GRV. See Gross Realisable Value.
Improved Asset. A real estate asset that has been improved from Raw Land. This usually refers to apartment units, commercial buildings, houses, subdivisions and other constructed property assets.
Interest Expense. The cost charged by a lender to a borrower for the use of funds. Interest expense is usually charged on the basis of how long the funds are held by the borrower.
Interest Rate. Interest rate refers to the interest charged on the Outstanding Balance of the Loan or, if the Loan is Fully Drawn, the entire Loan Amount.
Fully Drawn. Describing a loan facility where interest is charged on the full amount of the loan, rather than on the Outstanding Balance.
Gross Loan Amount. Sometimes also referred to as the Loan Limit, this is the total amount of the Loan Facility, including any Capitalised Fees and Capitalised Interest that are being financed. For instance, if a Facility has a Net Loan Amount of $5,000,000, Capitalised Interest of $100,000 and Capitalised Fees of $50,000, the Gross Loan Amount would be $5,150,000.
Land Banking. A loan for unimproved land, or for a property asset that will be significantly improved from its current state (e.g. a farm that’s to be turned into a subdivision).
Lender. The entity lending money to a borrower. In the Funding Finder system, the names of Lenders are kept confidential and are represented by a three letter code.
Lender Alias. The three letter code representing a Funder in the Funding Finder system. Lender Aliases are used to keep the names of Funders confidential. See also FAQ “Why can’t I see the lenders’ names? What is with the 3 letter aliases?”
Line Fee. Line fee is the fee charged by the lender to have the money available, even though it has not been disbursed to the borrower. It is charged on the Gross Loan Amount and is recorded as part of the interest expense.
Loan. Money lent to a borrower in exchange for interest and fees. On the Funding Finder website, Loan is often synonymous with Loan Amount and Loan Facility.
Loan Amount. See Gross Loan Amount.
Loan Facility. An agreement under which a lender provides funds to a borrower in accordance with certain terms and conditions.
Loan to Value Ratio. The Loan to Value Ratio (LVR) is the ratio of the Gross Loan Value divided by the total value of the collateral. The benchmark LVR for most First Mortgage lending is 65%. The LVR is usually lower for land banking (50% to 55%) and often higher for commercial loans and residual stock loans.
LVR. See Loan to Value Ratio.
Mezzanine. See Mezzanine Debt.
Mezzanine Debt. Debt that is subordinated to Senior Debt. Mezzanine funding is often convertible to equity under certain circumstances (e.g. default). Mezzanine Debt generally has a higher interest rate than Senior Debt and will often have a higher maximum LVR.
Net Loan Amount. The amount of money that gets paid to the Borrower or the Borrower’s Creditors. The Net Loan Amount is the Gross Loan amount less any Capitalised Fees and Capitalised Interest that are being financed. For instance, if a Facility has a Gross Amount of $5,000,000, Capitalised Interest of $100,000 and Capitalised Fees of $50,000, the Net Loan Amount would be $4,850,000.
Net Realisable Value. The estimated selling price of a property development in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale
NRV. See Net Realisable Value.
Outstanding Balance. The amount of a loan that is currently outstanding, usually the sum of all funds advanced, plus accrued interest and fees.
Preferred Equity. Except for equity, the lowest level security interest in an asset. Preferred equity is paid out only after all debts are paid out.
Raw Land. Land that has not been improved with infrastructure or constructed assets.
Report on Special Conditions. A report that explains and evaluates the impact of special conditions on a property, such as flooding or contamination. This report will usually describe the nature and extent of the issue, as well as what is needed to remediate the problem. Sometimes it will include an estimate for the cost of the remediation. Lenders will usually require a report on any special condition impacting a site. Lenders will almost always want to know the cost of remediating any significant issues to the site. This cost would normally be evidenced in the report on the special condition, or with a third party quote to remedy the condition. Evidence of remediation is usually a remediation report (issued by the same group that issued the report on the special condition). Receipts for payment for remediation services are also useful.
Residual Stock Loan. A specialised term loan financing recently completed but yet-to-be-sold property assets, usually residential apartment units, lots in a subdivision or commercial buildings that have yet to be sold or leased out.
Second Mortgage. See 2nd Mortgage.
Senior Debt. A loan which has 1st mortgage security over the property being used as collateral. Synonymous with 1st Mortgage Loan.
Service. In the context of property finance, service means the payment of interest on a loan as it comes due.
Serviced. Describing a loan where the interest is paid as it comes due.
Short Term Loan. Usually, a commercial loan
Size of Site. The physical size, in square meters, of a piece of property. The size of the site is often of significant interest to the lender, as it has a big impact on both valuation and the types of development that can be done on the site.
Size of Structure. The physical size, in square meters, of the existing structure (e.g. house or apartment building) is often of significant interest to the lender, as it has a big impact on both valuation and whether the site can earn rent for the borrower while preliminary work (e.g. obtaining the construction certificate, finalising architectural drawings) is being done.
Special Condition. Special conditions include things like asbestos contamination, underground petrol tanks, flooding, sewage or power lines crossing the property, or other physical characteristics of the site that would have a significant impact on the ability to develop or build on the site.
Stretch Senior. A type of loan that has elements of both Senior Debt and Mezzanine Debt. For instance, instead of Senior Debt with a 10% interest rate and an LVR of 65% plus Mezzanine Debt with an 18% interest rate with an LVR of 75%, a Stretch Senior loan would have an interest rate of 15% and an LVR of 75%.
TDC. See Total Development Cost.
Time to Settle. An estimate of the average time required to settle the loan, measured from signing of the indicative term sheet to final settlement. Most lenders say that they can settle short term loans in 1 to 3 days, commercial loans in 2 to 4 weeks, and construction loans in 3 to 4 weeks. However, this is usually based on them having a valuation available. Obtaining a valuation often take 2 weeks or more.
Total Development Cost. The sum of the hard and soft costs to complete a project excluding Development Application costs and the holding costs prior to Development Approval.
Upfront Fees. Fees due at the start of a loan, usually the Establishment Fee, Brokerage Fee and Funding Finder Fee.
Valuer. A firm that assess the value of properties, including residential, commercial, industrial and retail properties. They may be engaged by private parties, corporations, financial institutions, or government departments and authorities. Not all valuers are created equal. Some are more widely accepted by lenders than others.
Valuation. See Valuation Report.
Valuation Date. The more recent a valuation, the more persuasive it is to lenders. Valuations are generally only good for 12 months. However, any valuation is better than none, so including a valuation usually helps in the loan application process.
Valuation Report. A report containing the details related to property, i's owner, valuation and additional information related to the property. Having a recent valuation from a reputable valuer with appropriate valuation instructions is a significant advantage in applying for many loans. At the very least, it makes things move much faster, as most lenders require third-party valuations, and that is one of the most time consuming parts of the due diligence process. The more recent a valuation, the more persuasive it is to lenders. Valuations are generally only good for 12 months. However, any valuation is better than none, so including a valuation usually helps in the loan application process.
Valuation Instructions. The instructions to the valuer indicating the basis on which the valuation should be made. Valuation instructions are incredibly important. If the valuation is not done for the purpose of a first mortgage loan, it will usually not be accepted by lenders. An example of valuation instructions:
Reliant party: an intending mortgagee
Purpose of the valuation: first mortgage lending and for no other purpose
Basis for assessment: market value “as is”, gross realisation value “as if complete” project
Zoning. The formal codification of the legal framework for use of a particular piece of land. The zoning of a site has a huge impact on pricing, terms and LVR of loans. Zoning varies by state.
The main zoning types in NSW are:
R1 – General Residential
R2 – Low Density Residential
R3 – Medium Density Residential
R4 – High Density Residential
R5 – Large Lot (Rural) Residential
B4 – Mixed Use
The main zoning types in VIC are:
RGZ – Residential Growth Zone
GRZ – General Residential Zone
NRZ – Neighbourhood Residential Zone
C1Z – Commercial 1 Zone
C2Z – Commercial 2 Zone
LDRZ – Low Density Residential Zone
MUZ – Mixed Use Zone
TZ – Township Zone
RLZ – Rural Living Zone
Zones in QLD and SA vary by Local Government Area and are too numerous to summarise here.