TALK DEVELOPMENT FINANCE

Q. Why should I use an independent broker?
A. An independent broker doesn’t just sell one lender's products they have access to the whole market, giving you much more choice.

Q. What is Development Finance?
A. Development finance is a funding product that can finance the majority of a building project requiring a relatively small amount of deposit form the client.

Q. What is a land bridge?
A. A land bridge is a short term product usually used to buy a piece of land with a view to gaining plan ning consent. Usually only 50% of LTV is available to borrow?

Q. What is PDR?
A. Permitted Development Rights is where a property has been deemed suitable for conversion from commercial to residential without going through a full planning application.

Q. What is an AIP/DIP?
A. Acceptance or Decision in Principle or AIP/DIP is an illustration sent by a lender setting out what they will be willing to lend subject to all the information you have given being correct. These illustrations are for information only and are not binding documents.

Q. What is LTV?
A. LTV or Loan To Value is the amount a lender will advance up to. So if the land value is £100K and the LTV is 70% then the lender will advance £70K Gross.

Q. What does it mean by “build cost”?
A. Build cost is a term that covers the total amount you need to finish the project, including professional fees, excluding the cost of the land.

Q. What are professional fees?
A. These fees usually include, Architect, Quantity Surveyor, Monitoring Surveyor, Site Insurance, Homebuilders Insurance.

Q. What is meant by "GDV"?
A. GDV or Gross Development Value is the estimated final value of the project. If a lender will offer funding of 70% of GDV on a property with an estimated GDV of £1m then the maximum they will lend is £700K.

Q. What is a legal undertaking?
A. This is where you as the borrower undertake to pay your lenders legal fees. You will put your solicitor in funds so they can make the undertaking to pay.

Q. What is a build schedule?
A. This is an illustration, usually on a spreadsheet, that shows week by week how the build is expected to progress from preparation to final building control sign off.

Q. What is a cost schedule/cashflow forecast?
A. This is an illustration that follows the build schedule which shows how much funding is needed to be drawn down and when.

Q. What are staged payments?
A. Staged payments are how a lender fund the building project. At each predetermined stage the lender will require a monitoring visit to ensure all is in order. When the monitoring surveyor is satisfied then the next stage draw down of funds will be triggered.

Q. What is a SPV?
A. An SPV is a Special Purpose Vehicle limited company specifically set up by the borrower to run the development through. This is something you would need to discuss with your accountant to make sure the company set up is the correct way to proceed.