You’ve found the perfect development site and need to source funding. Traditionally you’d ask your bank manager for funds. But what do you do if you don’t have a bank manager, or if your bank says ‘no’?

Finding the right lender for you: A good way to find a suitable lender is through personal recommendation or by appointing a broker to find one for you. Make early contact with them and present sufficient information to enable a full assessment of your project. Too many great schemes struggle to get the right funding either because the proposal has not been presented properly or the wrong lender has been selected.

3 factors your lender will want to know:

• Borrower background: Borrowing entity, previous experience, employment or business history, assets & liabilities.
• Scheme: Site location, planning permission, plans & elevations, cost appraisal & cashflow, schedule of Gross Development Values (GDV), supporting sales agent’s advice and comparables, details of the construction team, details of any site specific risks or non-standard construction methods.
• Security: The lender will require a 1^st legal charge over the site. Any restrictions on the site? Any deferred consideration?  If borrowing via a company, personal guarantees will also be required from the directors/shareholders and possibly a mortgage debenture.

All lenders will have a maximum Loan to Value (LTV) restriction and occasionally makeweight security can be considered to support higher borrowing subject to a clear and viable repayment route.

A responsive lender will contact you within a day or so with an indication of funding appetite and terms and an early credit decision shortly after. Many lenders will require a Red Book Valuation as a condition of approval. Upon acceptance of the lending offer, and valuation where required, both parties instruct lawyers to undertake usual property due diligence to perfect the security package.

Where the security package is non-complex the legal process should take a matter of weeks. To avoid any undue delays or surprises it is prudent to make the lender aware of any known title restrictions, boundary or right of way issues, leases and/or specific buyer obligations, from the outset.

Not all lenders are the same: Monitoring of the development progress and spend against budget is critical for both the developer and the lender to ensure scheme success and address any issues as they arise. Many lenders will appoint a third-party surveyor, at the borrower’s cost, to monitor the project and authorise tranche loan development draws.

When you apply for a development loan at Bricks Finance, we like to meet all our clients and visit the sites. That is why we only offer development finance to sites in the South of England and Wales, near to where we live.

We have a wealth of experience with property development and so fully understand the risks and opportunities. We pride ourselves on being supportive funding partners and on providing straightforward and flexible loan solutions. We do not insist on Red Book Valuations or monitoring surveyors and this can be a significant cost saving during the life of the project.

Trust and understanding are priorities for Brick Finance so that we can work together throughout the build, side by side, to ensure its success for both of us and minimise the risk of failure.

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