Where to start
Once you have identified the project and roughly worked out viability, costs, end value and profit margin, get in touch on 0345 345 6788. It doesn't matter if you don't already own the land/property.
We will then ask you lots of questions, (known as a fact find), to get as much information about the development as possible. This will allow us to appraise your project and give you an honest opinion as to whether we can help, i.e. we'll let you know if there are any lenders who might be willing to provide the necessary finance.
We have years of experience working with lenders to finance developments large and small. We can help with residential, commercial and mixed use developments.
If we can help, we'll provide you with an indication of the type of rate and terms you can expect to be offered. This information is often known as "indicative terms" and will include a breakdown of the anticipated costs and fees.
The proposal / application
If the indicative terms are acceptable to you, we will start the process of compiling the proposal and submitting an application to the most suitable lender. You should be prepared to provide a full development appraisal to include the following:
- CV and evidence of previous development projects / experience
- Details of the planning consent including any restrictions, Section 106 or Community Infrastructure Levy requirements
- Drawings / plans
- Full breakdown of the development costs
- Likely end value of the project (known as the Gross Development Value)
- Schedule of works and build stages
- Timetable for release of funds which ties in with the end of each stage of the build
- Asset and liability statement
- Financial accounts
- Full details of the professional team involved
- Proof of identity
- Exit strategy (e.g. sale or refinance)
Lenders are always keen to meet the developer to understand the project from a professional and personal standpoint, so we will arrange a site visit between you and lending manager. Usually we will accompany you to help answer any questions and support your application.
Formal loan offer
After the site visit, the lending manager will submit a report on the project which helps with the underwriting process. Your application is then submitted to the underwriters. At this stage there is often a bit of toing and froing to ensure that the lender has all the information needed to make a decision. If the underwriting is positive, your application will go before the lender's credit committee for approval. Once the committee has approved the application, the lender will issue a formal loan facility offer, subject to the findings of a valuation report. The offer will confirm the precise terms of the loan including rates, costs and fees.
The lender will require a valuation report which comments on certain aspects of the development. We will arrange for this to be carried out by a surveyor who is recommend by the lender. The surveyor will comment on:
- The value of the site in its existing condition
- Predicted build costs
- Anticipated gross development value
- Exit strategy - sale or rental potential on completion of the project
If you accept the terms of the formal offer letter, you will need to sign and return it to the lender. At this point solicitors can be instructed to carry out the legal work. In development finance applications it is usual for the lender to have separate legal representation. Make sure you choose a solicitor who has relevant experience. Also, bear in mind that some lenders require the borrower's solicitor to have at least two or three partners in the practice. At Mortgages for Business we have an in-house legal representative who can talk to solicitors on both sides (lender and borrower). This ensures that the entire process is kept on track.
The loan application is complete when the finance had been fully arranged. It is at this stage that the funds can start to be released, in pre-agreed stages subject to sign off by a quantity surveyor or architect. With most loan facilities, interest is only payable on the money drawn down.
When the development is finished, if the loan facility has an exit fee, this will need to be paid to the lender by the agreed date.
What you should do now
Give us a call on 0345 345 6788 to chat through the finance options.