The market for development finance is changing for mortgage brokers introducing loans under £5 million to the market.
Bridging finance providers are now taking the lead, according to Alternative Bridging Corporation Limited (Alternative Bridging), the short term lender offering both regulated and non-regulated loans.
Such loans were previously the domain of high street banks and a few specialist lenders, but recently clearing banks have been reluctant to lend for speculative property projects unless for regional and national developer’s larger projects. Hence the door has opened for bridging finance providers to enter the market.
Brian Rubins, managing director of Alternative Bridging said:
“The maths is relatively simple: we will advance 65 per cent of the gross development value (GDV) and this translates to between 80 per cent and 90 per cent of project cost. Some lenders call it stretched senior debt and others structured finance and charge extra fees or profit shares. However, to us, it is just our standard development finance package which is simpler to effect and easier to operate and usually cheaper for the client.”
He went on to explain:
“There is a learning curve for brokers and the key to success is knowing what information is needed, gathering it together at the outset and presenting it to the lenders in an orderly fashion. We provide comprehensive information on our web site and are more than willing to provide tuition “on the job” when it is needed. It is well worth introducers learning the lessons.”