Bridging Finance
Secured Finance
A bridging loan is typically a quick form of secured funding sorted out in 2 or 3 weeks. This can be for a variety of purposes but the basics of how a bridging loan works is as follows;
- You have some form of property to secure this funding against
- This can have a mortgage or be unencumbered
- A percentage of this will get released by a bridge
Generally once you have decided a Bridge is the right option for you, we will look to the market to provide you with the right options. You can have a rolled up Bridge or a serviced bridge, any questions on this just ask. But once a lender has been chosen they will likely require a valuation. But the above is pretty much the basics of how a bridge works and the process.
This is a more complicated form of finance, but this will generally be for a property developer or builder who owns a site (or looking to buy the site), and needs the funds to build the project out.
So lets say I own a site that I’ve purchased & have just been granted planning permission for 10 houses. Each house is worth £200K once finished. What development finance would do is raise you the funding based on certain milestones being done. So Lets say I need £1.2M to build the houses of the £2M value the site will have once its done.
Lets say there are 4 phases of a build, see below;
- Phase 1 – Set the foundations
- Phase 2 – Build the shell and floors
- Phase 3 – Put the roof on and secure the property
- Phase 4 – Fit out the property to get it ready for a sale.
What will happen is you will get given a certain amount of money to get you to the end of the each phase and a QS (quantity surveyor) will come out at the end of each phase to go over whats been done. Then when Phase 1 is signed off, you will get your second tranche of money. All of this will generally be ironed out by what your build schedule will look like.
Any questions on costs on something like Bridging or Development let me know, but typically there will be a 2 – 4% setup fee and around 1% PCM on the amount of funds out. These are pie in the sky figures and obviously depend on a million different factors. But if you trying to put costs together this wont be a bad shout.
Development Finance
Development Finance
This is a more complicated form of finance, but this will generally be for a property developer or builder who owns a site (or looking to buy the site), and needs the funds to build the project out.
So lets say I own a site that I’ve purchased & have just been granted planning permission for 10 houses. Each house is worth £200K once finished. What development finance would do is raise you the funding based on certain milestones being done. So Lets say I need £1.2M to build the houses of the £2M value the site will have once its done.
Lets say there are 4 phases of a build, see below;
- Phase 1 – Set the foundations
- Phase 2 – Build the shell and floors
- Phase 3 – Put the roof on and secure the property
- Phase 4 – Fit out the property to get it ready for a sale.
What will happen is you will get given a certain amount of money to get you to the end of the each phase and a QS (quantity surveyor) will come out at the end of each phase to go over whats been done. Then when Phase 1 is signed off, you will get your second tranche of money. All of this will generally be ironed out by what your build schedule will look like.
Any questions on costs on something like Bridging or Development let me know, but typically there will be a 2 – 4% setup fee and around 1% PCM on the amount of funds out. These are pie in the sky figures and obviously depend on a million different factors. But if you trying to put costs together this wont be a bad shout.