Securing development finance if you don’t fit the profile sought by institutional lenders can be a complicated process, especially when there is more than one challenging factor in play. In such instances, it is often helpful to use a broker with a thorough understanding of alternative funding methods such as peer-to-peer lending platforms.
I was recently able to successfully explore this avenue for a Lithuanian client who had been resident in the UK for many years. Having purchased a property for £230,000, she needed 12 months of finance to convert this site into four flats with a post development value of £600,000
In addition to financing the completion of the works, my client also needed to remortgage from her existing bridging finance facility. This was quite pressing, as she only had four weeks to repay this.
There were several issues to overcome, however. The timescale was particularly tight, and my client’s lack of experience was off-putting for many lenders. She was also yet to secure the necessary planning permission. Finally, the property was located in Bristol; lenders will visit a site throughout the duration of the project to check its progress, making this an inconvenient location for London based lenders.
After consulting with my client, I approached a peer-to-peer lender. Peer-to-peer lenders aren’t bound by the limits of institutional lending, and are therefore much more flexible in regards to the projects they take on and the locations they are prepared to fund.
Fortunately, this lender was also able to take a view on the lack of planning permission. They were happy to proceed on the strength of the fact neighbouring properties had been granted permission for similar projects. Common sense therefore dictated my client would be very likely to receive the permission she sought.
Furthermore, this lender felt confident they could meet the tight timescale, by having the valuations and legals run in parallel. I was therefore able to secure my client the loan she required, at an annual rate of 10% per annum.
Peer-to-peer lending format allows for a great deal of flexibility, with decisions being made with a common-sense approach. This lender also offers fast decisions, and can offer large loans for a range of project sizes.