Almas Uddin
Founder and Mortgage Advisor
23 Feb 2021
Client Background: Revolution was approached by a client seeking development finance for a self-managed project. Our client had found it challenging to negotiate borrowing rates as a first-time developer looking to construct extensive residential property across two sites.
Property Information: The development site was located in Gillingham, Kent. In total, the project consisted of two locations. Development one included three flats, of which one was a premium penthouse property. Development two was a site with 16 apartments.
Financial Requirements: Our client had considered the development budget and had opted to carry out the project management himself to reduce the overall project budget by 40%.
He was looking for a multi-million-pound development finance loan, with an option to roll up interest to repay through the exit strategy (site resale), rather than need to budget for ongoing interest charges throughout the build.
The Revolution Brokers Solution:
The Revolution Brokers team identified that the primary barrier to borrowing was the factor that the applicant was a first-time developer. We worked closely with our client to draw up detailed plans, predicted sale values and costings to demonstrate the project's stability and the exit strategy's viability.
We negotiated with the identified lender to ensure they were comfortable with the application and paint a detailed picture of the development project.
Following these consultations, the lender was happy to support the loan and made a formal offer to lend, covering the build's full cost on a rolled interest basis.
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Property Valuation:
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£5.4 million gross development value (on completion)
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Total Mortgage Borrowing:
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£2.2 million
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Loan to GDV Ratio:
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53%
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Negotiated Interest Rate:
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9.5%, rolled interest
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Mortgage Term:
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18 months
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Monthly Payment Value:
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£0 - rolled development finance
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Arrangement Costs:
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2%
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Exit Charge:
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1%
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