What was needed?
Our client had identified a plot of land that they saw a development opportunity for and needed to raise capital in order to purchase the plot as well as cover the costs of developing it into residential properties.
What did we do?
We spoke to the client to understand what their experience was like, whether they had a good track record, and where they were with planning permission for the plot.
After establishing these facts and what they were looking for, we helped the customer to shop the market and agree development finance over the mid term to cover the cost of purchase and development.
LTV
- Loan to Day 1 Value – 64.39%, this was to cover the immediate costs, meaning just under 65% of the immediate cost.
- Loan to GDV – 53.85%, this was the amount of the loan against the Gross Development Value, or the estimated eventual value of the project upon completion.
- Loan to Cost – 79.03%, which was the amount borrowed against the actual cost of the project.
Rate
A rate of 7% per annum, or per year, was agreed, making the arrangement flexible.
Term
The project took a total of 18 months before the client completed their exit plan.
Exit
The client repaid the principle of the loan through the proceeds of selling the properties once completed.