This is a question we are often asked, so here is a basic explanation in case you are wondering yourself:
Unlike a bridging loan construction finance is generally not released on one lump sum. More normally it will be broken into stage payments, which would be agreed as the application proceeds. This has a number of advantages, not least, that the borrower will only be paying interest on the money they have borrowed. When building a detached house, for example, you do not need the full build cost in one draw down. As the build progresses more funding is required and the money will be released to you as you need it. This will have a positive effect on the profitability of the loan as you are not paying interest on the full facility from day 1.
The application will require some basic personal or company information and detail of the project itself. For us, the main concern is the project and who is carrying it out, so a sparkling credit history is not a pre requisite to gaining finance. To help us it is useful if, when making initial contact you can provide the following information:
- All the figures – land costs, build costs and end values, not forgetting how much you want to borrow.
- Detail of the scheme – what is it that you plan to undertake? Is it a new build, a conversion or a more basic refurbishment?
- Location – A crucial part of the underwriting process is where the site or property you wish to work on is located. Although we do lend in most areas, there are restrictions and certain schemes will be more favourable in some locations than others. As values in different areas vary we need to know the precise location of the project to assist with out initial underwriting process to allow us to give you an in principle decision.
- Your experience – We need to know your background in development and if this is your first project we like to know from the start who is running the site or carrying out work for you
With the above information we can start to underwrite your construction finance proposal in detail and make our initial decision. When we get back to you with a quote we prefer to have as much information as possible so that we can be sure, as can you, that a “yes” means a definite “yes”. We are not a lender who will say yes to a project for the sake of it and get you “off the market”. We will only give a positive response to your enquiry if we genuinely want to fund the deal for you. This should give you confidence that the finance will be forthcoming, subject to our normal due diligence and reports, such as valuation.
Before the money is drawn down we will agree an approximate schedule for the draw downs so you can plan your build and be certain to not run out of funding, which can obviously slow down a project considerably.
We always complete building finance loans, as quickly as possible but it is worth remembering that these are not simple bridging loans and so realistically the loan will not complete within days, as you might expect from a bridge. This is not to say we are slow, far from it. We normally provide decisions on projects the same working day and often within a couple of hours from initial contact.
We are one of the few specialist lenders who have experience having funded various projects over years of being in the sector. We can offer advise, expertise, enthusiasm and dedication to your proposal which few can match. We are also a lender who will look at projects outside the M25 and South East – we have experience providing funding in places such as South Wales, Birmingham, Manchester, Yorkshire and Scotland, for example.
We provide as simple a construction finance solution as possible in the most efficient manner with great value products, get in touch today and discuss your requirements.