The Fund will invest exclusively in registered first mortgage loans over residential, commercial, retail and industrial property in Queensland and Northern NSW.  The Fund will lend primarily but not exclusively for residential construction and development projects.

The policies of GPS in the following key areas are:

• maximum loan amount limits for any one borrower;
• the borrowers capacity to service loans will be assessed by provision and analysis of suitable financial records which provide evidence that interest payments can be met when and as they fall due or interest for the loan term will be capitalised within the loan amount;
• when the loan is renewed as a result of exceeding its initial term, the loan will be reassessed as if it was a new loan, including obtaining an updated valuation of the secured property; and
• security properties will consist of residential, commercial, retail and industrial properties in Queensland and Northern NSW. All loans made by the Fund are secured by registered first mortgage over real property. Security properties need not be income producing.

LENDING CRITERIA

The GPS lending criteria for the Fund includes the following:

• all loans made by the Fund are secured by registered first mortgage over real property;
• loans can be secured over completed properties or for construction or property development;
• at a minimum each borrower must verify that the ongoing obligations of the loan can be serviced and provide a statement of assets and liabilities;
• normally the loan will be on an interest only basis with loan interest payable periodically in arrears including for the term of the loan. Loans can be written where the interest and certain contingency amounts are capitalised and added to the loan amount. Under these circumstances, the total loan approved including capitalised interest and contingency amount must be within the loan to valuation ratio restrictions;
• the initial loan term will be no longer than 2 years; and
• the valuation of the secured property satisfies the criteria prescribed by the valuation policy.

LOAN TO VALUATION RATIOS (LVR)

Often construction and development loans typically include capitalised interest and certain contingency amounts however prudent LVR levels are maintained.

These ratios apply at the time of approving a loan and are designed to mitigate some of the lending risks. GPS will not necessarily approve a loan at the maximum LVR of 80% and often less. During the course of a loan the total debt owing may exceed the LVR limit set for the loan on the value of the mortgaged property due to a combination of factors, including a decline in the value of the mortgaged property, or accrual of unpaid interest or other costs.

Where the loan relates to property construction or development, GPS ensures that the Fund only provides monies to the developer in stages, that is, on a “cost to complete” basis, based on independent quantity surveyors’ written evidence of the progress of the development.

VALUATION POLICY

In determining the value of the relevant secured property, GPS will rely on a valuation report from a professional panel valuer made within the 3 months before the loan is made. The valuation is to be based on the then current market value of the property (the “as is” value). The valuation must deal with all the matters specified in the valuation instruction as applicable, including but not limited to consideration of:

• comparable sales;
• matters affecting the title and zoning of the property;
• saleability of the property;
• suitability of the property for mortgage security purposes; and
• relevant valuation industry standards and codes.

 GPS will instruct the valuer for each particular property from its panel of valuers. The valuer must be registered with an appropriate state/territory valuer body or registration scheme, where one exists.