Finance Development Loan Case Study – Lady Bay Nottingham

By: James Newland

This finance development loan was for a property investor who has purchased a development site for £200,000 with planning consent for 4 two bed flats.

Loan £235,000 peak borrowing
Valuation £500,000
Loan to Value 54%
Interest rate 1.75% pcm
Total Return £31,529.56
Term 10 months
IRR 24%

We provided 95% of the cost for the development and got a first charge over the freehold of the land and works. Interest was rolled up against drawn funds only calculated on a daily basis. Payments were issued against an independent monitoring surveyor’s certificate, the cost of which came from the facility. The borrower sold 2 flats to repay the facility and retained 2 for their portfolio.