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Land loan for cashflow release, followed by a Property Development Finance Loan for five new-build houses

Deal Structure

Land loan – 50% LTV

Development loan – 65% of GDV

Interest rate – 1.25% per month

Arrangement fee – 2%

Exit fee – 1%

12 months term

Deal Summary

Our client is a ‘first time’ developer who owned a site, unencumbered, with planning consent for 5 houses.

The client had an urgent cashflow need in another of their businesses and urgently wanted to borrow some money against the land value. The plan was then to obtain a planning uplift for larger properties and develop out.

The risk issues for the lender were:

  1. The client had no ground investigation reports whatsoever, and the request was for the lender to make the land loan in advance of these being available.
  2. First-time developer.
  3. The client did not want to bring in a main contractor on a fixed price JCT contract for the build out – instead preferring to use the services of a project manager they already had a relationship with, to manage the scheme.

We therefore needed a Property Development Finance lender that could be extremely flexible in their approach to the deal.

Such a lender was sourced and a commercial view was taken on the ‘risk’ issues mentioned above,  allowing a fast drawdown against the land value and a development facility went in place once the ground investigation reports were available and the planning uplift was obtained.

Gary Ellis

Contact

Gary Ellis

Quick Enquiry

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 NACBF and FIBA. ICO registration reference Z1196910.