Last post: Sep 15, 2021
Finance for developers, small builders, renovators and property portfolio builders is becoming a hugely competitive place with speed of delivery at an all time high, ensuring that projects are funded quickly to get a quicker return.
Here are your top options:
Development finance on the Recovery Loan Scheme
The rates have become more competitive and there is now no barrier to enter the scheme, as we can all show an impact of COVID-19, which is all that is required.
Indicative terms:
*Deals over £5mill - Circa 6.5% - 7%
*Deals £3mil - £5mill - Circa 7.1 +%
*GDV lend of a 75% - Deals between 65-75% GDV lend will carry a 0.5% extra charge.
*Fees approx 3%
Revolving Credit Facility for property purchases / refinance or working capital support for property improvements
*Up to 80% LTV based on the most recent valuation or purchase price when taking into consideration prior mortgages.
*Daily interest rates from 0.041% which is equivalent to 1.25% per month
*Valuations may not always be required, subject to recency of current valuations
*Confirmation of Title may not be required
*No Early Settlement Fees or Exit Fees after the first three months
*Monthly interest servicing with capital repayments being at the borrower's discretion throughout the term of the facility
*The facility offered is over 12-month term with an option to renew
*From £50K to £1 million
*Fee 3%
The Hybrid Option (can be used for business purposes as well)
*5 - 30 year term
*Day 1: borrowers can draw down the funds they need from the facility. Monthly repayments are calculated on the drawn funds balance.
*Within years 1-5: flexible period where borrowers can continually redraw up to their credit limit.
*Overpayments: can be made without incurring charges; overpaying frees up available funds for further drawdown in years 1-5.
*At the end of year 5: the flexible period ends and the loan balance reverts onto a standard term loan for the remainder of the term (the 'residual loan').
*Residual loan: paid off on a capital and interest basis until the end of the term or when the loan is refinanced.
*Secured on one property at a max of 75% LTV
*Rates from 4.5%
*Fee 3% - 5%
Bridging
*75% LTV
*Rates from 0.49% (for low LTV) Higher - 0.6% plus
*Possible adverse background
*Fees from 1%
*Plus valuations & legals
Secured Business Loans
Before rejecting this one straight off the bat, it is worth noting that we have an increasing market for secured business loans; it may come to a point where the 'unsecured' lending becomes just too expensive, and the affordability calculations mean qualifying will become much harder.
The great thing about secured business loans is that they can be reasonably cheap, and the amortisation period is longer, giving better affordability ratios.
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