Case Study: Development Loan - £560,000

Location:      Dudley

Amount:       £560,000

Type:            Development Finance

Specifics:       16 days turnaround from enquiry to loan

 

Project completed: January 2020

The Client:

A very experienced borrower purchased a property, alongside the adjoining unoccupied land, with the view to create a number of ground-up developments on the land. The borrower had experience with constructing from-scratch projects, having built numerous residential properties within his portfolio.

The Property:

Planning application was submitted to construct 4 x three bedroom properties which would also include off-road parking facilities. Located within the in-demand area of Netherton in Dudley, the properties would benefit from being in close proximity to a range of amenities. They were also near major access motorway links to Birmingham and the rest of the UK.

The Challenge:

Initially the adjoining car park was not owned by the developer. Using his own funds to progress the project, he then required a development loan from Mint Bridging to fund the works. The borrower had their contractors in place with a budget. It outlined the ambitious schedule of works and all costs, which they expressed were achievable. The borrower was looking to construct the properties within 12 months, all of which were to be finished to a good standard and ready for sale at the loan exit.

The Solution:

Mint Bridging were able to provide a loan of £560,000 over a 12 month term, with a first charge on the land and the developer’s residential property. We included a contingency clause which was to be separated equally amongst each of the development draw-downs should this be needed. Also included in the facility was additional time, at the end of their expected completion date, in order to provide time for the sale of the properties.

The Outcome:

The developer achieved their completion date goal, alongside sales agreed on all four properties prior to the project finishing. As properties were delivered to a high standard, they all achieved an asking price above the expected pre-completion market value.

There was an unforeseen issue with the new purchasers all buying under the “Help-to-Buy scheme.” This meant the developer did see completion times being far longer than expected. Mint Bridging was able to work with the borrower to extend the loan by giving capital reductions as the sales happened. This ultimately reduced risk as the sales completed for the remaining period prior to the exit.