Freehold Caravan Park Funding Bundaberg

Securing a Commercial Loan to Purchase a Caravan Park

Case Study: Freehold Caravan Park Commercial Loan Brokered by Mortar Finance in Bundaberg, Queensland

Client Overview
A long-standing family business in Bundaberg, Queensland, was entering a new chapter of ownership. After five years of working as the on-site manager of his family’s caravan park, the client was ready to formally take over operations from his father as part of a family succession arrangement. The business had been operating successfully for many years, with strong cash flow and a loyal customer base, and the transition was part of a well-planned generational handover.

To complete the transaction, the client required commercial funding to acquire the freehold caravan park from his father. The agreed purchase price was $1,100,000, and the property itself was independently valued at $4.3 million, providing significant equity to support the loan application.

Client Requirements
The client approached Mortar Finance seeking assistance in structuring and securing funding for the acquisition. While he had years of management experience running the park, this was his first time applying for large-scale commercial finance.

Key requirements included:

• Funding of $1.1 million to complete the freehold purchase from his father.
• Security to be provided via the caravan park property.
• Inclusion of vendor finance, where the father would retain a portion of the payment as a monthly repayment arrangement.
• A long-term finance solution to ensure affordable repayments and business continuity.

The client also wanted a lending partner who understood the complexities of family business transfers and could accommodate a dual funding structure involving both a commercial lender and vendor finance.

Challenges
This transaction presented several unique challenges that required careful structuring and documentation.

Firstly, because the deal involved family succession, the lender needed assurance that the transaction was being conducted on a commercial basis. This required independent valuations, formal sale contracts, and legal agreements to clearly define the transfer terms.

Secondly, the inclusion of vendor finance meant that the client’s father would effectively hold a second mortgage over the property. This required detailed coordination between the primary lender, the vendor, and legal representatives to ensure all parties were protected and the lending structure met regulatory requirements.

Finally, the lender had to consider that although the client had strong industry experience, his formal financial history as a business owner was limited, making documentation and financial forecasting crucial to gaining lender confidence.

Solution
After assessing the client’s financial situation, business experience, and the overall value of the asset, Mortar Finance recommended a business loan through Westpac Bank.

The loan was secured against the caravan park property, with an additional mortgage over the water allocation, an essential asset for the operation and value of the park. This dual-security structure provided additional assurance to the bank, helping to secure competitive terms and favourable approval conditions.

The facility was structured over a 15-year term, providing the client with manageable long-term repayments and the ability to maintain sufficient working capital for ongoing business operations and maintenance.

To accommodate the vendor finance arrangement, Westpac accepted a second mortgage position for the father’s portion of the agreement. The father continued to receive monthly repayments as part of a structured vendor finance deed, allowing for a smooth financial transition while maintaining the family relationship.

Lender and Legal Involvement
The transaction involved close collaboration between Mortar Finance, Westpac’s Business Banking division, and the client’s solicitor. The solicitor played a critical role in drafting and managing the family deed agreement, ensuring that all legal obligations were clearly defined and that the transaction met both banking and regulatory standards.

Throughout the two-month approval process, Mortar Finance coordinated communication between all parties, collecting financial documentation, managing valuation processes, and ensuring timely responses to lender queries. The broker’s involvement was key to aligning the requirements of the bank, solicitor, and family members to achieve a successful outcome.

Approval and Outcome
After a comprehensive assessment period, the loan was approved by Westpac Bank. The facility provided full funding for the $1.1 million purchase price, secured by the caravan park property and water allocation, with the vendor finance agreement formally recognised under the lending structure.

Settlement was completed smoothly, finalising the transfer of ownership from father to son and establishing the client as the new proprietor of the caravan park business.

Results and Benefits
The successful settlement enabled the client to continue operating the caravan park seamlessly under his ownership while preserving the family’s legacy in Bundaberg. Key benefits of the transaction included:

• Full ownership of the freehold caravan park, valued at $4.3 million.
• 15-year commercial loan through Westpac with competitive terms.
• Vendor finance arrangement formalised via a family deed and second mortgage.
• Strong security position supported by property and water allocation mortgages.
• Smooth transition of management with no business disruption.

The client now enjoys the benefits of being a business owner while continuing to run the park he knows intimately. The structured finance arrangement ensures long-term stability, predictable repayments, and flexibility for future capital improvements.

Conclusion
This case study demonstrates Mortar Finance’s expertise in complex commercial lending, particularly in transactions involving family succession and vendor finance. By partnering with Westpac Bank and experienced legal professionals, Mortar Finance was able to design a tailored lending solution that balanced commercial requirements with family considerations.

Through strategic structuring, clear communication, and diligent management of the approval process, Mortar Finance successfully delivered a finance package that allowed the client to achieve full ownership of the family business, securing both his financial future and the continuation of a well-established Bundaberg caravan park legacy.