Development Exit Loan Via a Private Bank

The Situation

Our client was an experienced property developer who had recently completed a development of 9 flats with a GDV of £2.2m. The client was looking to sell two of the apartments and rent the remaining seven units in the short term. They required funding secured on the remaining seven flats on the ‘broken freehold’ to fund a future property development.

 

The Solution

We secured a deal for the clients with a private bank on a very competitive annual rate with no early repayment charges. The bank was fully aware that the client wished to dispose of the individual units throughout the course of the next two years.

 

The Process

The main difficulty that the client faced is that most banks would only offer a deal of this type on a development exit loan charged on a monthly bridging rate with a high percentage arrangement fee.

Very few banks would be happy to lend on a broken freehold with full disclosure that the client may sell some of the units within the next two years.

The private bank we approached was happy to offer a loan on their standard Buy-to-let product with full disclosure that the client wished to dispose of the units throughout the term.

An arrangement was established where the client would reduce the borrowing facility in line with the expected LTV on the disposal of each unit.

 

The Outcome

The client now has an established relationship with a bank that can finance a varied and diverse portfolio of commercial properties.

The client’s funding line remains in place to swiftly purchase future commercial properties.

Over 12 months, this deal will save the client over £60,000 when compared to traditional development exit bridging.

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