Case Study: Developer Exit Bridging Loan secured against x4 new-build houses in Surrey.

Client Objective

A new client approached us after becoming extremely frustrated with the underwriting & application process of another lender whom he had approached via another broker. The client wanted a Developer Exit bridge but didn’t have Practical Completion certificates in-hand. Even though the costs to complete the works were less than 5% of the total construction budget, the other lender wanted to work on a “residual” valuation basis instead of lending against the GDV.

Our Approach

We know which lenders are commercially minded enough to fully understand the risk & structure the deal accordingly. We know which lenders would NOT concern themselves with a valuers opinion of the residual value, and instead would lend against the GDV whilst retaining the equivalent of the costs to complete the scheme until those works were done. We know which lenders would NOT need to get their own QS or Asset Manager involved to pull the costings apart and waste time.

Outcome

Common-sense underwriting saw the Developer Exit bridge delivered in good time, despite some works still left to do, with no new valuation report required (existing report was re-addressed to incoming lender) & with the existing QS retained:

• Pricing secured:  0.74% pcm
• Fees: 1.5% Arrangement Fee, No Exit Fees, No additional Broker Fee.
• Loan size: £900,000
• Asset: 4 x new-build houses in Surrey, part-complete.

Impact

Developer’s build programme was not interrupted by the change of lender, the scheme will now be completed in a matter of weeks, triggering the sale of the first 2 units on which buyers had already exchanged.