Business
Mortgage Business
Loan Buy To Let
Self Build
Mortgage
Build Lending
Most
high street banks are currently resistance to property
development finance. This is because they have to build
their capital reserve after new FSA regulation, show greater
underwriting caution and most importantly they are too
heavily loaded on property risk on their books.
So
good builders and property developers are struggling to
find suitable finance at a reasonable price. Many feel
that the worst of the recession has pasted and though
we have some way to go yet before a major recovery, by
the time a new project is completed there potentially
could be a healthy profit.
Lenders
will look for several main criteria. A history and good
track record of building. This would normally be reflected
in the last three years trading accounts. The ability
to service the debt and pay it back on time. And securitisation
of the loan, so possibly for the debt to be covered with
a charge, first over the new plot but also over other
property.
There
will have to be a lower loan to value, maximum up to 65%
though rates are generally cheaper until 50% as there
is less risk to the lender. Lender will also want to see
planning permission and details of a costings breakdown
of the plot. Some builders are keen to construction timber
framed property as it is faster to erect and not affected
so much by the weather compared to standard block work.
Lenders
currently lending in this recession climate may charge
a higher rate than previous high street lenders .There
will be possibly entrance and exit fees, solicitor and
quantity surveyor fees along with a valuation that will
have to be paid by the borrower.
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