Overview
LocationUsed by us to distinguish where the property is that the loan will be made against. Lenders can be location agnostic, and believe that different locations should attract different Underwriting Criteria and pricing : Pinner, Middlesex
LoanWhen something is borrowed by one person / entity from another. Normally it refers to money, and a rate of Interest is charged whilst the debt remains outstanding. More Type : Bridging; Development FinanceSpecialist funding, specifically used to fund a Development Project. Lenders predominately use a combination of LTC and LTGDV to assess how much they are willing to lend. Other factors also come into consideration; Property Type, Location, Development Experience, Profit Forecast, etc. A lender will determine the total Gross Loan they are willing to advance, and then deduct Lender Professional Fees, Lender Interest, Lender Arrangement Fees, and 100% of the Build Costs. The Residual Loan is then available to draw against the Land, so is often referred to as the Land Loan.
LoanWhen something is borrowed by one person / entity from another. Normally it refers to money, and a rate of Interest is charged whilst the debt remains outstanding. More Size : £8.4m
LoanWhen something is borrowed by one person / entity from another. Normally it refers to money, and a rate of Interest is charged whilst the debt remains outstanding. More to Value : 70%
The Situation
Our client was looking to purchaseThe act of buying something from another person, or in property terms, buying a property from another person. a retailAs a Commercial Property type this refers to properties used as shops of any kind; e.g. grocery, clothes, opticians, etc. unit with office uppers that had a stub leaseThe contract between Landlord and Tenant, that governs the terms of the latter occupying the former's property. It will include Rent due, payment terms, the deposit amount, the term of the tenancy, tenant and landlord responsibilities and break clauses amongst others. and qualified for permitted development rightsRights to develop property that are granted by Parliament and allow certain building works and change of use without having to make a further Planning Permission application to the local authority. The rights differ between Residential Property and Commercial Property. The conversion of Offices to Residential Property has been a popular route that many Developers have followed. See Transitional Assets.. The clients plan was to hold the assetAn item of property owned by a person or company, that has a value and could be used as Security for a Loan. during the leaseThe contract between Landlord and Tenant, that governs the terms of the latter occupying the former's property. It will include Rent due, payment terms, the deposit amount, the term of the tenancy, tenant and landlord responsibilities and break clauses amongst others. run-off (just over 2 years) and then attempt to revise the planning to add additional development space during that period, and then sell site or build out the development themselves. Such projects are referred to as Transitional AssetsAssets where the overall aim is to change the current use of the property. Offices that have Permitted Development Rights are one such example, but it would only be classed as Transitional if when the buyer took ownership the property was still being used as Offices and was Tenanted. Such situations can be tricky to fund, but fortunately there are Lenders that are actively seeking to fund such situations., and most lendersA company or person that lends money to another. do not like them.
The Challenge
The client required relatively high gearing, and also the comfort that the lenderA company or person that lends money to another. could accommodate the transition to development financeSpecialist funding, specifically used to fund a Development Project. Lenders predominately use a combination of LTC and LTGDV to assess how much they are willing to lend. Other factors also come into consideration; Property Type, Location, Development Experience, Profit Forecast, etc. A lender will determine the total Gross Loan they are willing to advance, and then deduct Lender Professional Fees, Lender Interest, Lender Arrangement Fees, and 100% of the Build Costs. The Residual Loan is then available to draw against the Land, so is often referred to as the Land Loan. if needed. The lenderA company or person that lends money to another. needed comfort around the anticipated build costs for the development, and the projected GDV of the scheme. As a brokerAn agent that negotiates situations for others. For us, this definition goes much further. A good Broker should be indispensable and add considerable value to you. I've not met any Property Professionals who do not recognise the importance of Brokers. Think of a broker as an extension of your business; like another employee but they are variable cost not a fixed cost, the FD you can't afford to hire., our job is then to satisfy the lenderA company or person that lends money to another. that there are alternate funding options based on those numbers (in case the lenderA company or person that lends money to another. decides they do not want to fund the development stage of the project). There is a lot of work that goes into such financing and we need to involve multiple third parties to evidence all of this.
The Outcome
We secured a loanWhen something is borrowed by one person / entity from another. Normally it refers to money, and a rate of Interest is charged whilst the debt remains outstanding. More of 70% LTVThe ratio of debt to property value, expressed as a percentage; for example a Borrower that obtains a Loan of £ 6,000,000, against a property value of £ 10,000,000, would be expressed as 60% LTV. against a purchaseThe act of buying something from another person, or in property terms, buying a property from another person. price of £ 12m. The lenderA company or person that lends money to another. committed in principle to funding 100% of the budgeted build costs at a later stage, subject to satisfactory QSA person that calculates the amount of building materials needed for a Property Development, and also the cost of these materials. If you are borrowing to fund a development, the Lender will always appoint a QS. Borrowers will normally have their own QS as well, but sometimes on smaller schemes it is not deemed necessary as the Main Contractor may be experienced enough to fill this role instead. reports and valuations at that time. By using a lenderA company or person that lends money to another. that could do both bridging and development financeSpecialist funding, specifically used to fund a Development Project. Lenders predominately use a combination of LTC and LTGDV to assess how much they are willing to lend. Other factors also come into consideration; Property Type, Location, Development Experience, Profit Forecast, etc. A lender will determine the total Gross Loan they are willing to advance, and then deduct Lender Professional Fees, Lender Interest, Lender Arrangement Fees, and 100% of the Build Costs. The Residual Loan is then available to draw against the Land, so is often referred to as the Land Loan., the client was more confident of the lender’s ability to follow through to the development funding stage. The lenderA company or person that lends money to another. too, was more confident in the scheme due to their better understanding of the background to the assetAn item of property owned by a person or company, that has a value and could be used as Security for a Loan. before development financeSpecialist funding, specifically used to fund a Development Project. Lenders predominately use a combination of LTC and LTGDV to assess how much they are willing to lend. Other factors also come into consideration; Property Type, Location, Development Experience, Profit Forecast, etc. A lender will determine the total Gross Loan they are willing to advance, and then deduct Lender Professional Fees, Lender Interest, Lender Arrangement Fees, and 100% of the Build Costs. The Residual Loan is then available to draw against the Land, so is often referred to as the Land Loan. was requested.