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LVR up to 70%

Loan term up to 36 months

Commercial and residential properties are eligible

Release equity out of the residual stocks

What is a Residual Stock Finance?

Dealing with unsold properties, referred to as residual stock, is one of the risks a property developer has to face sometimes.

Some property developers decide to keep some of their properties and sell them later when the market is better. This way, they can maximise the return on investment and aren't forced to sell in a hurry.

The good news is, there's a way to handle this issue – it's called residual stock finance.

A residual stock loan is a short-term loan tied to the homes that haven't been sold yet in a development project. This kind of funding eases the burden on the developer, providing them with the time to find buyers who are willing to pay reasonable prices for unsold homes.

Critical information sheet

Our loan guide

Residual Stock Finance

Loan amount

Starts from $100k

Interest rates from

From 10.99% p.a.

Loan term

Up to 36 Months

Pre-approval time

24 – 48 hours

Unconditional approval & settlement time

10-15 Business days

Repayments

Interest Only & Capitalised Interest

Security

Underlying residual stock

What you need to know

Can be used for

To release equity out of the completed projects

To invest into a new project.

Documents required

Valid identification proof

Security Details

Exit Strategy

Others depending upon loan product

*The information provided in critical information sheet is intended as a guide only. Please contact us for more information.

What you should know about Residual Stock Finance

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Who is a residual stock loan for?

Residual stock funding caters to property developers who finish a project but still have unsold dwellings. Having unsold dwellings can create a significant financial gap even though they can generate some income by renting out the unsold homes, the profit is considerably less compared to selling them.

Developers may end up with unsold stock due to a market downturn, making their selling prices seem high. Alternatively, they might intentionally hold back some properties to prevent oversupply in the market.

Pros and Cons of Residual Stock Finance

Pros

Financial Relief: Residual stock loans offer a solution for developers facing financial challenges due to unsold stock.

Refinancing Advantage: Developers can transition from a higher-rate construction loan to a lower-rate residual stock loan.

Extended Loan Term: This transition allows for an extended loan term, providing developers with more time and flexibility.

Reduced Pressure: With the extended loan term and lower rates, developers no longer feel compelled to hurriedly sell unsold stock, avoiding the risk of accepting lower prices.

Cons

Possibility of Over-Leveraging: Relying heavily on inventory-based loans can lead to over-leveraging, posing financial risks during challenging times.

Impact on Credit Score: Defaulting on payments can negatively affect the business's credit score, making future financing more challenging.

How does a residual stock loan work?

A residual stock loan is a short-term agreement that is tied to stocks/properties that have not been sold yet.

This financial solution usually involves refinancing, transitioning from the original property development finance, which may have a higher interest rate, to the new residual stock finance with a lower rate.

It's important to note that terms can vary significantly among lenders in the world of property development finance. Typically, residual stock finance loans have durations ranging from six to 36 months, with loan-to-value ratios (LVR) falling between 40% and 70%.

What properties are eligible for Residual Stock Finance?

Residual Stock Finance is open to both commercial and residential properties. The loan can be utilised for refinancing an existing development facility loan or for accessing cash.

How much can I borrow?

Typically, it’s only private lenders that offer this type of so-called take-out finance, but we have a couple of non-bank lenders on our panel that can help.

  • Borrow up to 70% of the value of each unit.
  • Max loan amount: Loans over $5 million considered on a case-by-case basis.
  • Max loan term: 1-2 years on an interest only term.
  • Low doc options are available.
  • Bad credit loans are not available.
  • Lenders prefer developments in metro locations.

Overall, It's important to note that the financing for a larger number of units may result in a lower Loan to Value Ratio (LVR) qualification. This is because funding numerous units presents a higher exposure, which is a risk that many lenders are hesitant to undertake.

How do I apply for a Residual Stock Finance?

1. Submit Application

First step is to simply fill out the application form with the required information and loan request.

2. Get Indicative Quote

Once the application is received, our lending specialist would get an indicative quote within 24-48 hours.

3. Letter of Offer (LOO)

Once we receive the mandate to proceed basis indicative quote, we get a formal letter of offer from the lender.

4. Valuation and Legal Docs

On receipt of signed LOO, the lender would initiate valuation and get loan docs prepared.

5. Disbursement

Once we receive the mandate to proceed basis indicative quote, we get a formal letter of offer from the lender.

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Why should you choose Broc Finance?

Tailor made options

Being a small business owner, many of our clients are not sure of right loan product for their businesses. Our lending specialists understand their needs and recommend tailor made options.

Personal Consultation

Unlike business loan marketplace websites which use AI based algorithms to match your requirements, we provide obligation free personal consultation as every business is different and an AI based algorithm may not provide them the optimum solution.

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Competitive Pricing

We endeavour to achieve the optimum business loan solution for our clients at the most competitive pricing possible.

Clear communication

We understand the essence of time so don’t believe in wasting our customers time by giving false hopes. Transparent and clear communication is in our DNA.

Real results with real people.

99+ customer reviews

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Aktaruzzaman Rasel

Aktaruzzaman Rasel

Thank you Neeraj Indraghanti and his team. Really apricated you help to getting the loan when we needed. We had an amazing experience with this company. We are so pleased with the service received from Neeraj. He went above and beyond to help us get out of the situation. The loan process was easy and hassle free. Looking forward to use your service in future too.
Tabitha Pomente

Tabitha Pomente

Working with Saroj and the Bronc Finance team has been an incredible experience. Their professionalism, knowledge, and support throughout the process have been outstanding. I couldn’t be happier with the service and results — highly recommended!
Don Hett

Don Hett

⭐️⭐️⭐️⭐️⭐️ Highly Recommend Saroj from Broc Finance! Saroj was incredibly helpful from start to finish. He listened to all my requirements, understood my situation, and got me the funding I needed super fast. I really appreciate how efficient and responsive he was throughout the whole process. If you’re looking for someone who actually cares and gets the job done without delays, Saroj is your guy. I highly recommend him for anyone needing funding support. A big thanks to Saroj and the team at Broc Finance for their great work. Wishing you all the best!
Mugdha Chandekar

Mugdha Chandekar

A Trusted Partner in Commercial Finance I had the pleasure to discuss with Broc Finance on a complex commercial mortgage transaction, and I can confidently say they are the experts and professinals in this space. If you're looking for a commercial mortgage broker who brings clarity, integrity, and genuine commitment to the table, Broc Finance is the one to call. Highly recommended for any business owner seeking tailored financial solutions.
Yogendra Jayadeva

Yogendra Jayadeva

Partnering with Broc Finance (and Saroj) has been a fantastic experience—seamless support, quick turnaround, and successful outcomes for even the trickiest business loan scenarios. Highly recommend them for reliable and efficient Business lending solutions!
Deepesh Parikh

Deepesh Parikh

Saroj knows his business. To the point guidance, everything from start to finish was as expected and confirmed by him. Always recommend him for sorting it your personal or business finances. Thanks a lot for all your help Saroj.
Daniel Butel

Daniel Butel

Saroj and the team are great, they are open and transparent with advice. Truly are advocates for your business and help to cut through the finance jargon that’s hard for business owners and operators to decipher
Zoltan Matrof

Zoltan Matrof

I wanted to express my sincere gratitude for your outstanding support in helping me secure finance. Your professionalism, clear communication, and dedication made the entire process smooth and stress-free. I truly appreciate your expertise and commitment—thank you for going above and beyond to assist me! World Gym Busselton

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Frequently asked questions

Businesses in retail, manufacturing, distribution, and wholesale sectors often benefit from residual stock finance. Any company with significant amounts of unsold inventory can potentially use this financing method to improve cash flow and liquidity.

How is the inventory valued in residual stock finance?

[Answer]

Lenders typically use a combination of methods to value inventory, including:

  • Market Value: Current selling price of the inventory.
  • Cost Value: Original cost of acquiring the inventory.
  • Liquidation Value: Expected value if the inventory were to be sold quickly, often at a discount

The time frame varies by lender but can range from a few days to a couple of weeks, depending on the complexity of the inventory assessment and the company's financial situation.

Yes, residual stock finance can often be used in conjunction with other financing methods such as traditional loans, lines of credit, and invoice financing to provide a comprehensive solution to a company's cash flow needs.

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