I was approached by a client who is a property developer looking for the best possible development finance rate. He already owned a large piece of land in the South West with planning permission for 15 units, worth around £800,000. He wished to buy the adjoining piece of land to add an additional 6 units to the development and needed to borrow £450,000.
My client also owned another local development nearing completion. This was currently worth around £1.5 million and had a small loan of £240,000 secured on it.
Using both his existing developments as security, my client was able to offer a low loan to value for the borrowing. With his existing development nearing completion he would also have cash available to service a facility once the properties had begun to sell.
I was able to negotiate a terrific deal with a private bank new to the development finance market. The lender agreed the full £450,000 secured on my client’s existing land with planning permission. As well as taking a first charge over this land they also took a second charge over my client’s near-completed development.
As a new entrant to this lending market, I was able to negotiate terms that were significantly better than other lenders. The bank agreed the facility at a cost of 1 per cent per month for a maximum of 12 months. This was around 40 basis points cheaper than other options, saving my client around £1,800 per month in interest costs.
The £450,000 loan allowed my client to buy the additional piece of land to increase his company’s pipeline of properties. And, by speaking to us, he was able to save over £20,000 compared to the quotes he had received from rival lenders.