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If you’re looking to purchase a property at auction – perhaps to refurbish, or to acquire the land to build upon – then you may need finance to complete the transaction.
75% GDV
36 Months
0.50%
Rolled
Up to 90%
£1M
£50M
OMV
Senior stretch loans – also known as unitranche financing or unitranche debt – are a form of hybrid finance that ‘stretches’ to meet the borrower’s needs.
Stretch senior debt is a hybrid structure for a loan available to businesses. It’s mainly used by middle-market businesses that are considering a leveraged buyout, or by investors looking to buy real estate, however, stretch senior debt has other applications too. This kind of loan packages up both senior debt and junior debt into one loan, and provides it at a lower cost than the business would pay if it had a standalone senior loan, plus a junior debt (a second lien or mezzanine debt for example.)
Yes, stretch senior loans can also be used for commercial and residential real estate investments. Typically stretch senior loans real estate last from 3-15 years and have a 70% LTV (although loans with a higher LTV can be negotiated.) These blended loans can be used for all real asset classes including hotels, multi-family residential, health care and student accommodation.
Hank Zarihs Associates is a highly experienced broker in the business development and investment finance market. We work with our clients to provide rapid access to the best finance deals in the specialist business market, at highly competitive rates. By working to understand our clients’ projects and business objectives, we are able to recommend the right financial products and to manage the application process. By doing this, our clients can focus on running their businesses, knowing that we are organising their stretch senior debt or other lending products in a rapid, efficient way.
With our knowledge and experience, we are able to present lending cases to our panel in a format which is most likely to increase your chances of being offered attractive development finance. By following a comprehensive due diligence process with each client we make it possible to find the right development loan in the UK, quickly and efficiently – from the right lender.
We’re also proud to work with most of our clients on a repeat business basis – by proving the value of our service at every turn and by building long-term relationships with our developer clients. Whatever your level of experience, size of project or development loan need, you can be guaranteed of a superb experience with the team of friendly and helpful experts at Hank Zarihs Associates.
Many specialist finance providers work through a broker network rather than direct to customer, meaning that the best deals are reserved for the best broker relationships! We can access deals that simply aren’t available through the open market – saving you money and obtaining the flexible features that you need.
We have access to a large and trusted pool of independent finance lenders with a strong reputation in the market. We have built our relationship with our lenders over the years and are proud to work with them; recognising the quality of their products and the strength of their service.
Ready to apply for development finance? We work with a tried and trusted panel of development lenders who are actively lending. The deals that we can recommend to our clients are updated daily, so you have complete peace of mind that you are receiving details of the best possible finance products on the market in real-time.
A development loan will be offered at a range of different interest rates, depending on the lender and the borrower’s own situation. To find out the latest / typical finance rates on your development loan, we have created a handy calculator that allows you to get an indication of what your repayments would be.
Every lender will offer something slightly different, but the main benefits offered by senior stretch funding arrangements are as follows:
Stretched senior financing is flexible and can be offered on a tailored basis that meets the business applicant’s needs. Stretch senior loans are ideal for businesses which are asset rich, but which don’t necessarily have stable or predictable cash flows. Sometimes they are also used by businesses with a strong and stable cash flow, but with a lesser asset base – allowing them to borrow more than a pure asset-secured loan on its own.
This type of loan can be organised rapidly, especially with the assistance of a specialist broker such as ourselves.
Stretched senior loans can be more affordable than other types of debt finance, thanks to their blended structure which gives the lender security in the form of assets/cash flow – and the borrower, lower interest rates.
Senior stretch debt facilities are rapidly available when you apply via a broker like Hank Zarihs Associates. Our lending panel is motivated to lend and has available funds. What’s more, our slick digital processes mean that we can secure funding for our clients in the shortest possible time.
Applicants can borrow more money with a stretch senior loan than they could with a senior loan – often from £100k to £100 million or more. This is because stretch facilities extend the loan capacity by structuring it against a blend of assets and cash flow. Typically, stretch senior funding will cover up to (the lowest of) 75% of project GDV or up to 90% of the project’s total costs.
Hank Zarihs Associates streamlines your financing journey with tailored solutions, fast approvals, and expert guidance, connecting you to trusted lenders for project success
Stretched senior loans are generally offered to experienced developers or businesses, on a first charge basis, and where detailed planning consent is required (in the case of a property transaction). These loans are monitored and preferred for development schemes involving multiple units. Most lenders will require personal guarantees – but not all. In terms of the information required to apply for your loan, this will include:
Hank Zarihs Associates can help you to put together the information that lenders need to see, in a way that most rapidly facilitates your loan approval.
What about mezzanine debt vs senior debt? The former is a hybrid capital arrangement that combines an investment in the applicant company and a loan. A senior debt is simply a loan facility. There are other differences too. For example, stretch loans are asset-backed and mezzanine loans are cash-flow based. Stretch loans are also first lien in nature, whereas mezzanine debt takes second place in the priority stakes for repayment.
Bridge loans are short-term, rapid loans that provide instant cash, giving the applicant time to put in place a repayment method (such as the sale of an underlying asset, or arrangement of a long-term standard mortgage.) They are collateral backed, extended for 6 months to 2 years (typically) and have relatively high-interest rates, charged on a monthly basis. Stretch loans are asset-backed, affordable, long-term and flexible financing arrangements where the lender has first lien on repayments.
Mezzanine debt vs senior debt? Stretch senior vs unitranche? Stretch loan vs bridge loan? The specialist development finance and investment market can be complex, with a variety of structured financial products that offer different features and benefits for different situations.
Whether you are an experienced developer or a more junior investor, our team are here to ensure you find the best possible finance for your needs. Contact us in the first instance from Monday to Sunday, 9 am till 9 pm, on +44 (0) 20 3889 4403. Alternatively, please make a callback request via our website and we will contact you at a time that best meets your needs.
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| Term & Repayment | Maximum term 36 months Interest Fully Rolled Up, Part-Rolled Up or Serviced (subject to affordability) The net advance will be less total potential interest over the term with the gross loan calculated as interest for the entire term and the arrangement fee added. | Maximum term 36 months Interest Fully Rolled Up, Part-Rolled Up or Serviced (subject to affordability) The net advance will be less total potential interest over the term with the gross loan calculated as interest for the entire term and the arrangement fee added. | ||||
| Exit Fee | Negotiable | Negotiable |
You may have heard about bridging loans in the context of property investment or moving house, but what exactly are they? Basically, bridging finance is a type of short-term loan that allows a buyer to purchase a property before their existing home or investment property is sold. As the name suggests, it ‘bridges’ the funding gap in the lag between purchase and sale – offering rapid access to the necessary purchase funds for a brief period of time.
Borrowers can access from £5,000 to £250 million, depending on applicant status, the value of the property and other lender criteria. Higher lending amounts are typically reserved for borrowers who can put up several properties as security. Quotes are provided on a Loan to Value (LTV) of 65%-80% in most situations.
The bridging finance market has grown rapidly, with a number of small and focused lenders now on the market, catering for specialist property finance needs. The market has changed because large high-street lenders have become less willing (and sometimes less able) to lend ever since the financial crisis of 2008.
As to whether a bridging loan for property development, auction purchase or private home buying is a good idea, it depends on a variety of factors. Bridging loan requirements vary by lender, but each will have certain common features that need to be considered.
The most notable feature of this type of finance is that the interest rate is likely to be high. At the same time, there are typically high administration fees applied to the loan. Because of this, it is essential to proceed very carefully and with a full view of the facts. Borrowers have been burned by this type of loan in the past, in instances where transactions have fallen through, or where lenders have turned out to be unscrupulous and untrustworthy.
Benefits of instant bridging loans
1. Rapid access to money
2. Ability to borrow large sums – often up to £250 million depending on applicant status
3. Options for flexible borrowing.
Possible downsides of bridging loans:
1. Failure to understand the unique features of these loans can result in financial risk
2. Bridging finance is secured against your property; meaning it can be sold if you can’t meet the repayment terms
3. A costly option with fees and higher interest
Bridging finance interest rates will vary by lender. However, interest costs of 1.5% a month are not unusual, which can equate to an annual percentage rate of 18%.
Bridging loans may have fixed or variable interest rate features. Fixed interest rates are ideal for customers who want stability, as they offer the same amount of interest for the duration of the term. The rate is pre-agreed, but there may be a premium for this security.
The other choice is to have a variable rate bridging loan which can change with the base rate. However, you can save money if the base rate decreases. Borrowers who are less concerned about security sometimes prefer the variable rate option if they believe that the financial markets will travel in their favour. Knowledge and market insight is required here, along with a thorough understanding of personal risk tolerance. If interest rates appear to be rising, most customers will choose the fixed interest rate to lock it in and avoid further increases in the event of a base rate rise.
Bridging loan periods tend to be for several months and there are usually different options for paying the interest portion.
Monthly repayments
The customer repays the interest every month as a separate payment, rather than adding it to the outstanding balance
Rolled-up bridging finance deals
The compound interest is calculated monthly but added to the outstanding loan balance and paid together when repayment is due.
Retained interest
The monthly interest payment due is covered up to a predefined date so that the full sum is only repaid when monies are due.
As well as interest payments, there will be an arrangement fee for the set-up of the bridging loan, which is usually around 1-2%. A repayment fee for exit paperwork may also apply, along with valuation fees for the cost of the surveyor.
Remember, this type of finance is designed to be short-term. As soon as it extends beyond the agreed interim or bridging period, penalties can rapidly stack up. Typically, bridging finance is available for 1 – 18 months.
Yes, there are two broad types: closed bridging finance and open bridging finance.
With closed bridging finance you will tell the lender how you will repay the loan – with what funds and when. These loans usually complete within a few months and the clear exit plan is required as a lending condition.
Open bridge finance won’t usually need this type of exit plan, and it is typically the loan of choice when funds are needed urgently to complete a property transaction. No detailed plan is needed to explain how the debt will be settled, and the finance tends to be offered for up to a year. Of course, it’s important to note that interest will keep being applied throughout this period.
There are also first charge bridging loans and second charge bridging loans.
If you have a loan against a property which is already mortgaged, you’d take out a second charge loan. An example of this would be if you were planning to finance a property extension to improve the property. The categorisation tells the lenders who will have legal priority for repayment if the loan was unable to be paid off at the term-end.
First charge loans apply if the new loan is the first secured on the property.
Bridging loan requirements will depend on the lender. Often, lenders will require that:
Customers must also take out their property mortgage with them too, providing the bridge finance as an interim measure before the standard mortgage comes into play.
Property is put forward as security against the loan. Some lenders expect applicants to have more than one property in order to be eligible for their bridging finance products, but this will depend on the lender and the size of the loan.
Applicants show proof of income – although, interestingly, as loan interest isn’t repaid monthly, some lenders do not request this.
The applicant shows evidence of their property investment track record if they are planning to develop their purchased property.
The applicant can show a business plan if they are using the bridging loan for commercial purposes.
Development loans are another type of short-term property development loan. They are repaid in stages and calculated on the gross value of the development. Personal loans are another option, as are remortgages when timescales are more flexible and a long-term loan is desirable.
Use a bridge loan calculator
Ask for your lender to provide a tailored bridge finance example or illustration around your particular borrowing needs.
Think carefully about the type of bridging loan that you need – whether open bridge finance or closed bridge finance.
Know whether the loan is a first or second charge type.
Clarify whether the interest rate is fixed or variable.
Review products from several lenders.
Be clear on your security.
Read the small print!
Bridging loans are offered by banks, building societies, specialist lenders and brokers. They aren’t widely advertised and usually require a direct application by the customer to find out the product features and offers.
Once you have made an application, a decision will usually be made within 24 hours. The funds then will take around two weeks to be issued, including time for checks to be carried out, the valuation and the actual transfer.
Hank Zarihs are highly experienced and specialist financial intermediaries operating in the property development market. We work with a tried and tested panel of over 60 trusted lenders and can provide excellent bridging finance with attractive features. Contact us to find out more.
Hank Zarihs Associates streamlines your financing journey with tailored solutions, fast approvals, and expert guidance, connecting you to trusted lenders for project success
A Privately Owned Independent Boutique Financier Whose Main Area of Focus is the UK Real Estate Market. Specialists in Raising Debt and Equity for Professional Sophisticated Investors and Developers.
Our core focus is offering fast solutions, financial products that deliver results, and the highest of service levels. If you would like to find out more please contact us to discuss your funding requirements.
Address: 2nd floor North Park House, The Precinct, High Road, Broxbourne, EN10 7HY, United Kingdom
Mobile: +44 (0) 20 3889 4403
Email: contact@hankzarihs.com
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