Bridging Loans at Eland Business Services Limited

Development Lender Launches New Product

A long established property development finance lender has launched an alternative product for developers. Does this mean that the finance market is improving?

Lender Now Has Two Options for Property Developers

A lender focused on property development in the south now has two finance products to choose from. We ask if the new product is for you?

Comparing New With Old

Regentsmead typically fund small residential developments for experienced developers of builders. The core of both products is that funding will be limited to 50% of GDV and 30% of purchase price and up to 100% of development costs. Funds can be available within 5 working days, however interest has to be paid monthly to fix the risk for the lender.

The difference is in the charging model used. Pricing is as follows:-

Original Product

  • Facility Fee 2%
  • Interest at 1.5% per month (18% per annum)
  • Exit fee 1% of GDV

New Product

  • Facility Fee 2%
  • Interest at 0.75% per month (9% per annum)
  • Exit fee 2.5% of GDV

The choice for any developer depends on attitude to risk and length of project. The new products lower interest rate means that monthly costs reduce the risks of any unforseen delays in either the development schedule or sales.

On the other hand the original product will have lower overall costs for developments with shorter timescales due to the fixed nature of the exit fee. The typical crossover point where the new product becomes cost effective is where a project is 9 months or more. Depending on timescales / drawdown schedules, the new product could offer savings of up to 25% or more.

Regentsmead are one of the few companies to have remained active in the lending market through these tough times. The new product demonstrates an appetite for new business by reducing monthly costs.

However there are products from other lenders that offer the option of interest roll-up and higher gearing - Contact us to discuss your project! We'll help you decide which lender is your best match!

What Does This Mean for the Rest of the Market

With other bridging finance lenders starting to offer refurbishment products and now a new full blown development finance product, maybe it's nearing the time we will see the banks re-enter the market. We have been hearing rumours on that front recently, but no news of actual deals done - yet!

Submitted by Bridging Loan Broker on Sun, 25/04/2010 - 14:26 Syndicate content | Bridging Loan Feed

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