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100% finance arranged for purchase price and development costs – without JV terms

A developer recently approached us to find them some finance for a conversion scheme – and were looking to borrow 100% of the purchase price as well as 100% of the build cost and professional fee budget.

The developer had borrowed on traditional joint venture terms in the past – whereby in excess of 50% of profits from their schemes (including arrangement fees, interest charges and profit share) had been taken up in charges from their chosen lender.

On this occasion, the developer had negotiated a particularly attractive purchase price for a property in an excellent location – and the scheme also lent itself to phasing.

We introduced a lender who structured a facility to provide 100% of the purchase price and 100% of the build and professional fee costs for phase 1 of the scheme – with sales from phase 1 then envisaged to pay off all of the monies borrowed at that stage, leaving phase 2 completely unencumbered. The developer then intends to put a ‘build cost only’ facility in place with the lender to develop out phase 2.

Lending charges on the above basis are projected to be between 15% and 20% of the forecast scheme profits, instead of the usual 50%+ , a fantastic deal for the developer for a true 100% finance facility.

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Positive Commercial Finance is a trading name of Business Financial Solutions Limited. Registered in England & Wales 06451075. Registered office address Warth Business Centre, Warth Road, Bury BL9 9TB. Authorised and regulated by the Financial Conduct Authority (716012). Full members of the NACFB and FIBA. ICO registration reference Z1196910.