- Product Type: Development Bridging Loan (Finish and Exit Bridge)
- Location: Sheringham, North Norfolk
- Loan amount: £1.33M
- Term/LTGDV: 12 Months, 44% LTGDV
The Scenario – A Nearly-Finished Development on an Expensive Rate
Our client, a property developer, was building three houses in Sheringham on the north Norfolk coast. The build was going well. The houses were wind and water tight, which means the roofs, windows and external walls were complete and the buildings were weatherproof, with the internal work still to finish. The problem was not the development. It was the cost of the money paying for it, because the client was sitting on an expensive development finance product and wanted to bring that cost down before the final push to completion.
What is a Finish and Exit Bridge?
A finish and exit bridge does two jobs at once. It provides the funds to complete the remaining works on a development, and it gives the developer a sensible window to sell or refinance the finished homes without the original funding running out. Because the lending is measured against the value of the completed scheme, the loan to gross development value, or LTGDV, shows how much room sits between the loan and the finished project. At 44% LTGDV, this loan sat at well under half the value of the completed development, which gives both the developer and the lender comfortable headroom.
The Challenge – Moving Quickly to Secure a Lower Rate
Timing was everything. To benefit from the lower rate on a new facility, the client needed to move quickly, redeem the existing lender and release the money to finish the build, all without holding up the final stage of construction. Every extra month on the old product meant more interest paid at the higher rate, which is exactly what a finish and exit bridge is designed to avoid.
Our Solution – A New Facility to Redeem, Complete and Save
NM Finance arranged a Development Bridging Loan of £1,332,958 over a 12 month term at 44% LTGDV. The new facility redeemed the previous lender and gave the client the funds to complete the build. It also reduced their monthly interest from 1.25% per month to 0.78% per month, a substantial saving across a facility of this size, and gave them the room to finish the development on much better terms.
