What was needed?
Our client in London was looking to borrow capital in order to build a brand new development of 8 mews houses, with the money going towards the cost of development.
The client had some money to provide up front, and already had the land and planning permission in place. The client was looking for a loan that would be in place for the duration of the construction, meaning a slightly longer term loan.
What did we do?
We sat down with the client, went through their plans, their experience and their construction timetable to ensure that they had the relevant plans in place before providing a number of options for lending.
The client settled on a development loan, which we shopped the market for to ensure they received the best rate.
The Gross Development Value, or GDV, was £5,400,000 and the client needed to borrow just under 65% of the GDV, meaning the LTGDV was 65%
Instead of a monthly or annual rate, a flat rate of 7.25% was agreed, meaning the client was to pay 7.25% of the total value of the loan in interest.
The client anticipated that the development would take 18 months in total, and the loan was agreed for 18 months.
Our client’s exit strategy was to use the proceeds of selling the properties to repay the loan at the end of the 18 months.