Lending Query
We arrange finance on residential projects up and down the UK. On this instance we were approached by a prominent developer based in Cornwall who was looking to finance his existing land loan & raise 100% of the build costs for a large single-dwelling scheme. The existing site consisted of a derelict house and benefited from full planning permission for a large 4 bedroom mansion including basement. The GDV of the project was £3 million and the client required a loan of £2 million.
Client Circumstances
This borrower, a UK national, had a good track record of developing residential properties in the Cornwall area and was confident of making a good profit on this scheme given the current demand for housing in the UK. The client had relatively little of his own funds to put into the build and therefore required a lender who was willing to fund the entire development with 100% of the costs.
Problems to Solve
Finding a lender who would finance the build of a high value single unit was a challenge. As many lenders in the UK are averse to funding these types of projects due to the fact that there will always be a smaller market to consider when it comes to selling following practical completion. The developer also needed a senior debt loan that would cover 100% of the costs relating to the build. Fortunately the market has seen alot more appetite for these types of loans since the Covid downturn.
Solution Provided
We were very pleased to a loan for the client as follows:
70% Loan to GDV
100% of Build Costs
£2,000,000
7% Fixed Cost of Funds
18 Month Term
Interest Rolled Up
2.00% Lender Fee (1% shared with Broker)