In the current market, what many developers are desperate for is more time, and a bit of breathing space. It’s notoriously hard to get anything built in the UK at the moment, and even towards the final stages of a development, roadblocks can emerge. Roadblocks that can be logistical, or financial in nature.
While we do not offer ground up development finance here at Market Financial Solutions, we do offer development exit funding. This is capital that’s typically used to clear original development finance, and/or finalise plans.
But, in some instances, particularly challenging developments need even more time to complete, or they may even be complete and are in the sale period, but tough market conditions may require more time to sell units.
This is where our Bridge Fusion product can be of use. A Bridge Fusion loan can be used for a development exit, and with a term of up to 24 months (with a discretionary 12-month extension), compared to 18 with our standard bridging loan, it may be a better option for longer term plans.
Say a borrower had a development which had practical completion, and the building regulations signed off. It has 10 units, with a total worth of £2m. The borrower may plan to use the developments for a part retained/part sold, or fully sold strategy.
But the market at the time may not be conducive to this. Perhaps the underlying units are of a high value, making them harder to sell. Or, maybe the local region is in a temporary downturn, meaning there are fewer buyers generally.
To mitigate this, the borrower may opt to sell £500k worth of properties each year, totalling £1m from months 6 – 21 of the term. Our Bridge Fusion product allows for 25% overpayments per loan without incurring early repayment charges (ERC) and, by overpaying after the first six months, they could lower their costs with a Bridge Fusion loan.
Also, while individual borrower’s circumstances will determine the set up of their loans, those with longer term plans will typically see lower repayments with a Bridge Fusion loan, over our standard bridge. At 75% LTV, the monthly repayments on a Bridge Fusion loan could be significantly cheaper.
What’s important to remember is that regardless of whether a property investor needs a short-term, or longer-term solution, Market Financial Solutions will have many options available.
Further reading:
- Featured Product: Bridge Fusion Loan
- Explainer Video: Bridge Fusion
- Tool: Bridge Fusion Calculator
- Guide: The Complete Guide to Development Exit
- Blog: What Is a Mixed-Use Development? Everything You Need to Know About This Growing Sector
- Blog: Performance Metrics for Real Estate Developers: What is Important?
