Below is the standard list of information a bank would expect to see for a development deal.
We need an overview of the deal. This will include the following items:
- Full details of the property – address, sales particulars, photos
- How the property was sourced – estate agents, auctions, personal contact etc
- Outline of what you are proposing to do – as much information as available at this stage, so may include drawings and planning consents etc
- Source and amounts of cash contributions from the borrower
- Name of legal entity that is buying the property – details of all directors, shareholders and their percentages
- Experience of the directors – brief CVs highlighting any experience relevant to the proposed project
- Schedule of assets and existing properties owned by the directors/shareholders
- Purchase price
- Build costs
- Anticipated GDV
This information is usually sufficient to gain interest from a lender
Specialist Commercial Lenders
- 70-75% of land purchase
- 70-75% of build cost
- Total loan cannot be more than 65% of Gross Development Value.
These lenders tend to lend in the range of £500k to £10m – ideally, we need to see 3 similar projects completed in the last 3 years.
1.5% arrangement fee: interest charged at 7% per annum; exit fee is 1% of GDV
- 80% of land purchase
- 100% of build cost
- Total loan cannot be more than 70% of Gross Development Value and 80% of total project costs, whichever is the lower.
Can lend up to £50m and will consider larger projects, depending on who the applicant is and the nature of the project.
2% arrangement fee; interest charged at 8% per annum; exit fee is 1% of loan amount. Although more expensive than the banks, these funders are quick and efficient and subject to few lending policy restrictions
- 70% of land purchase
- 100% of build value
These funds come from a successful semi-retired builder so, if he likes the project, funding is quickly made available. Completion in 7 days is possible.
Arrangement fee; interest is charged pa; exit fee is 2% of loan amount.