Development exit – rescued in the nick of time

Your home may be repossessed if you do not keep up repayments on your mortgage

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In this week’s blog, our bridging and development specialist, Simon Deeming, tells us about how he found clients a way through a tricky borrowing situation… “We were recently engaged by two directors of a construction company who had borrowed £4.2m on a high-end residential development project. Their existing finance was coming to an end and the incumbent lender wasn’t prepared to extend the facility because the company had experienced some recent financial difficulties. This meant that they would be forced into punitive terms and an accelerated sales campaign, potentially leading to a loss on their 2-year project. This was not an unusual situation. Covid and its economic consequences has caused budgets to be exceeded and cashflow issues towards the end of many development projects. In turn, many lenders in this space have been left exposed with unfinished projects at high LTVs making them rather heavy handed with clients; refusing to consider refinancing and following through with penalties and default rates which, in my opinion, only exacerbate the problems. Our clients prioritised their payment obligations to merchants and sub-contractors at the expense of their own personal finance leading to credit issues. With some small works remaining to get to practical completion and with a slow property market there was limited appetite amongst lenders for such a high value loan nudging the 70% LTV threshold.

How did we help the client?

Being experienced in this field we were able to secure a very favourable rate and extremely fair arrangement fee with a lender that routinely completes deals like this. On the opposite end of the spectrum, we see many lenders confidently say “yes” to deals like this before having a proper conversation with their funding lines. Therefore, especially when time is tight, we place a premium on being able to speak directly to decision makers, to avoid delays and false starts.” Talk to Simon about your development exit deals to get the right advice first time. simon@mortgage-style.co.uk 01275 370360 YOUR HOME/PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP TO DATE WITH YOUR MORTGAGE REPAYMENTS. There may be a fee for mortgage advice. The precise amount of the fee will depend upon your circumstances but will range from £495 to £995 and this will be discussed and agreed with you at the earliest opportunity.