Securing multiple loans for a ground up development

What was the situation?

The client approached me looking to raise development finance after setting their sights on a large plot of land with planning permission. Located in Shropshire, the planning permission was for 7 bungalows. The client wanted to secure a loan of £1.2m for the ground up development.

As an experienced developer, the application was compelling for a lender to consider.

What was the issue?

In addition to the full development loan amount, the client also wanted to secure a bridging loan to acquire the site. This could be backed by the client’s other properties by way of security.

Ideally after securing the bridging loan, the client wanted to remain with the same lender for their development loan and draw down funds throughout the build.

The concern for lenders was the site location as it was extremely rural, therefore making it difficult to find comparisons.

What was the process?

The application was presented to lenders as a 30 week build program, aiming to be complete within 26 weeks. The estimated GDV was £2 million and their exit strategy was to refinance, as they were working on a build to rent strategy.

I knew that in order to secure finance I needed to speak to as many lenders as possible to gauge appetite for the client’s scheme and location. Using my close relationships with certain lenders, I was able to narrow down who would be best to consider this application. A private investor was a good option because it meant the developer could purchase the site with no capital requirement, as their equity was tied up in their property portfolio. Once identified, I negotiated hard to get the highest leverage I could possibly obtain.

To ensure I succeeded with this application, I dedicated a considerable amount of time to coordinating the lender, solicitor, the private investor and the client’s own solicitor to orchestrate the completion by pushing communication between parties. It was also important for me to attended meetings on site to ensure timings were met.

What was the solution?

By managing the application so tightly, I was able to secure 65% LTGDV at a competitive rate. They were able to successfully complete and continue with the development as intended.

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