COMMERCIAL

OPTIMISER

Our deal optimiser service gets lenders competing for your business. Fill in the details below and our experts will work in the background to negotiate the best deal for you.

YOUR DETAILS

LOAN REQUIRED:

£100,000

PROPERTY VALUE:

£250,000

TERM ( YEAR ):

YOU NOW HAVE 2 OPTIONS

OPTIMISE

You’ve seen the lender’s standard published rate, but we can often negotiate a better deal for you using our deal optimiser service. Tell us more about this property and we can automatically get lenders competing for your business and guarantee you a bespoke no-obligation quote the next day!*

Optimisation saves our clients £9,466 on average**

OPTIMISE MY DEAL

* bespoke quotes supplied the next working day following provision of all required lender information being supplied and validation by Propp case manager

** saving based on annualised interest rate saving where deal optimiser service negotiated a lower rate than lender’s published rate, based on current average saving of 0.9% and average loan £1051785. Time saving based on automated versus manual bespoke rate requests.

JUST EMAIL

Fill in a couple of details below and we’ll email your results to you.

ALL PRODUCTS ARE FOR UNREGULATED BRIDGING ONLY. SHOULD YOU REQUIRE A REGULATED BRIDGE, PLEASE CONTACT US. AS A MORTGAGE IS SECURED AGAINST YOUR PROPERTY, IT COULD BE REPOSSESSED IF YOU DO NOT KEEP UP THE MORTGAGE REPAYMENTS.
COMMERCIAL MORTGAGES AND SOME FORMS OF BRIDGING AND BUY TO LET FINANCE ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.

FINANCING FOR PROPERTY DEVELOPMENT TIPS

MAKE SURE YOU DO YOUR RESEARCH

The golden rule of any property development project is to make sure you leave no stone unturned in your initial due diligence. Which are the up and coming areas? If there’s a big university in the area, where do the students live? Where are the good schools? Does it have adequate public transport? For larger and more complex schemes, a feasibility study will need to be conducted by a major surveyor, in order to ascertain a detailed understanding of the local micro factors and larger macro factors that could affect the project’s viability.

This way you won’t be building a luxury property in an area that really needs affordable homes for first-time buyers or key workers, or building student accommodation in an area that already has an oversupply.

BE REALISTIC

Be realistic, on everything. Hope for the best but always plan for the worst.
Be realistic on your experience level. If you attempt to get development finance for a property project that is far outside your previous experience, then the chance of success will be slim.
Be realistic on the value assumptions that you make. Most RICS surveyors won’t share your optimism, and the hoped for value by the local estate agent also has to be taken with a pinch of salt.
Be realistic on the cost. Again, hope for the best, but plan for the worst. Most lenders will require a 10% contingency added to the costs and will require a quantity surveyor to look over your estimates.
Be realistic about how long it takes to get development funding. Finance can take up to 3+ months for highly complex large scale developments. For smaller developments, 6 weeks is achievable for the average property project.

USE AN EXPERIENCED DEVELOPMENT FINANCE BROKER SUCH AS LOANX

It is almost impossible for anyone other than an experienced specialist development finance broker to truly take advantage of the opportunities found in such a fragmented finance arena. There is a myriad of specialist lenders, small niche lenders, private investors, family offices, hedge funds, venture capital firms, private equity funds, peer to peer networks and banks. Without being fully immersed in the sector, you would never know you are getting the best finance option possible for your property project.

Of course, there are other benefits when you use our services. The huge amount of documentation required for a development finance application can be daunting. An experienced broker such as LoanX will prepare a professional funding memorandum to ensure your property project is seen in the best light possible by the lender, ultimately saving time, money and effort.

PLANNING PERMISSION & PLANNING CONSENT

When borrowing to convert former commercial properties to residential, it is often possible to take advantage of specialist planning consent via Permitted Development Rights, especially if the work is internal only. Although consent is still required, it is much easier to attain than submitting a fresh planning application.

If you do need planning permission, it is advisable to arrange it before looking for funding, as most lenders will require sight of the consent before they will review the lending proposal.

JOINT VENTURE WITH THE LANDOWNER

If you are fortunate enough to know a landowner who owns land whose use could be changed for new build development, then pitching a JV to them could be a lucrative option.

If you bring an unencumbered plot of land with planning to the table, most lenders will offer development finance up to 100% of the build cost. It’s up to you then to negotiate with the landowner on the profit split.

TAKE CARE WHEN CHOOSING A MAIN CONTRACTOR

As well as carefully reviewing your credibility as a developer, the development finance property lender will also pay close attention to the main contractor, both their financial strength and their experience in delivering schemes of a similar nature and scale in the recent past.

The lender will want to ensure that the main contractor is:

Experienced in the type of construction method that you are proposing
Is used to working at the scale you propose
Is familiar with any unique challenges your scheme may face i.e listed building or non greenfield construction
Has 3 years of profitable accounts and a strong balance sheet
Has cashflow sufficient to float 1 or 2 months costs if necessary

PLAN YOUR EXIT STRATEGY

You may wish to hold the completed asset as an investment, so refinance is what you will be looking for. If that is the case, then the lender may ask for evidence that the completed project meets the exit finance providers criteria i.e a mortgage agreement in principle (AIP).

If selling or leasing a commercial asset, you may be asked to provide heads of terms or a letter of intent from the proposed end user, such as the lease agreement for an office, or the contract for a hotel operator.

However, if you are looking to sell the completed development scheme once built, then there are several options available, such as the off plan presale to a local housing authority or a specialist block purchase buyer, often “forward funded.

Whatever the development exit route chosen, be sure that you have done your research.