The lending market for development finance has polorised hugely over the last few years. Broadly speaking, the market is now split into three distinct brackets:
- Big multi unit sites, low loans to value (LTVs), no planning issues. Those with strong development experience also fit into this bracket. You can expect to secure financing at 3-4% per annum via the main lenders whose names will be familiar (RBS and the like). Think slow, involved and detailed – but relatively cheap.
- Smaller sites, single high value units or higher LTVs. Challenger banks will lend on such projects at 4-7% per annum. Again, there must be no planning or title issues. You will need to show a good track record and have plenty of time to get through the lending process.
- Everything else. This is where bridging finance comes into play.
Bridging finance is now a key product for all property professionals. It can be used to:
- Buy property without planning, or for assets with defective or unusual titles
- Buy property which isn’t producing income in the short term
- Sit as 1st, 2nd or 3rd charge to maximise gearing
- Arrange quick financing, without arduous paperwork and processes
- Arrange short term financing – ideal for quick refurbishments, conversions and extensions
- Arrange financing without exit penalties, meaning you can refinance or sell as soon as the project is complete
- Can be secured over multiple assets to give you maximum funding
- Interest and fees can be rolled up to aid cash-flow
Interest rates for development finance are softening rapidly. For some developers, it is the only way to secure funding; for others, it is extremely good value.
To ensure you are receiving the correct development funding both in the short term and the long term, we will work very closely with our colleagues at Enness Private Clients, giving you access to a huge suite of mainstream, secondary and bridging lenders.
We have huge experience in this market and will help you structure your funding quickly and efficiently. no matter what your position