Property Conversion / Refurbishment Finance FAQs

• Which type of property conversion/refurbishment/restoration do you finance?
• How much can I borrow?
• Can you lend to property developers affected by the property crash/credit crunch and have CCJs, arrears, repossession or bankruptcy?
• Do you only lend to experienced developers?
• Can't I borrow more cheaply by increasing my mortgage?
• I had a valuation carried out recently - can you use this valuation report?
• How fast can property development finance be arranged?
• What is your application process?
• What are your arrangement fees?
• Are you registered with (or are your loans regulated by) the Financial Services Authority (FSA) or the Consumer Credit Act (CCA)?

Which type of property conversion/refurbishment/restoration do you finance?

We finance all types of property development and improvement:

Conversion of houses, barns, mills, schools, hotels, chapels, nursing and care homes and most residential and commercial property into residential accommodation or commercial use - as either single or multiple units;

Refurbishment of houses, hotels, blocks of flats/apartments, HMOs and most residential and commercial property - to include major alterations and extensions;

Restoration of Grade I and Grade II listed buildings, property in conservation areas.

How much can I borrow?

There are no hard and fast "loan to values" with property conversion/refurbishment/restoration finance. We do have general guidelines, and the maximum (as at June 2011) is around 90% of current valuation/purchase price, plus 100% of build costs. However, each development will be assessed on its merits, such as:

1. The type of development (e.g. residential, commercial, houses, flats etc);
2. The location of the development (prime locations can obtain higher levels of funding);
3. How profitable it is (the more profitable, the higher the possible loan);
4. Your experience as a property developer.

100% property development finance is still possible for good quality schemes. To get an idea of the level of funding available for your development, have a look at our product terms & criteria page - or contact us with details of your development.

Can you lend to property developers affected by the property crash/credit crunch and have CCJs, arrears, repossession or bankruptcy?

This is a common question recently, and we're pleased to say yes, we can usually help. Property development finance is usually agreed on a non-status basis. We lend against the value and profitability of the development. We can lend to those whose bankruptcy has been discharged, although not where the bankruptcy is undischarged.

Do you only lend to experienced developers?

Lenders always look to reduce risk; one way of doing this is lending to experienced developers who have proved they can complete a development on time and within budget. However, we can arrange finance for those who can demonstrate these skills plus relevant experience, such as architects, quantity surveyors, estate agents, building contractors or project managers.

If you have no relevant experience it is challenging to obtain funding in the current climate, however, if you have a substantial deposit (equal to 40% of total costs) and a strong professional team behind you, please contact us to discuss your requirements.

Can't I borrow more cheaply by increasing my mortgage?

Good question! And as such it deserves a good (and detailed) response. Having been a fully qualified Independent Financial Adviser and Mortgage Adviser, regulated by the FSA for 17 years - and a specialist business and property finance adviser for the last 8 years - I speak from considerable practical experience.

First and foremost, bear in mind that a property development is a business project, which can take up to 2 years from planning, construction and marketing, until the properties are sold and you receive the proceeds. Many things can happen during this time to affect these profits. Without wishing to spread doom and gloom, I have unfortunately witnessed many property developers suffer financial hardship since the credit crunch of 2008.

So I would have to answer your question with this question: "Do you want to put your (family's) home, savings and other assets at risk throughout this process?" Your residential mortgage was for the purchase/improvement of your main residence - it is not designed to be used for business finance. Property Development Finance is a product designed for the purpose and has three important advantages over a residential mortgage:

1. You will not put your (family's) home at risk. The loan is secured against the development;
2. You need not put your other assets at risk. You can create a "special purpose vehicle" (SPV) to raise the finance and carry out the development through this limited company. If the development fails, your assets are safe due to the financial protection offered by limited company legislation;
3. The construction loan is released in stages, and as interest is only charged on the balance outstanding, this could work out cheaper than a further advance or remortgage of your home where interest is charged on the whole loan which is released from outset.

I had a valuation carried out recently - can you use this valuation report?

Possibly, provided that it is a full development valuation and appraisal carried out by a reputed chartered valuer. Most property development lenders use a strict list or panel of approved valuers, so would need your valuer to be on their panel. Others can use any firm of valuers, subject to certain criteria. We may require specific information which is not in the original valuation report, so your valuer may charge a fee to retype his report.

How fast can property development finance be arranged?

From the moment you contact us with details of your proposed development, we aim to get you an agreement in principle within 24 hours. For further details of our application process, see below.

What is your application process?

We can usually prepare an agreement in principle with illustrative terms within 24 hours of initial enquiry. This will outline the requirements for a formal offer to be produced, such as professional valuation report, Quantity Surveyor report, sight of scheme drawings and planning consents, detailed financial appraisal and cashflow forecast (which we can prepare for you), and details of your professional team.

We may also need to carry out a site visit with you. When we have all these details, a formal offer can be prepared and then it is down to your solicitor to complete the legal formalities. The whole process can take from 2 - 8 weeks.

What are your arrangement fees?

We do not charge any up-front fees; our fee is only payable upon completion of the transaction.

Many clients do not have to pay us a fee at all. Instead, the lender charges an arrangement fee of around 1% and then pays us out of this. We will provide a full fee quotation and disclosure of any commission payable when you request a quotation.

As usual you will be responsible for valuation fee and legal fees.

Are you registered with (or are your loans regulated by) the Financial Services Authority (FSA) or the Consumer Credit Act (CCA)?

No. Property conversion/refurbishment/restoration finance is NOT regulated by either the FSA or CCA*.

We believe in total transparency, and we have deliberately chosen not to be regulated by FSA or hold a Consumer Credit Licence, so as to avoid giving the misleading impression that our service or loans are regulated.

* The only exception is for properties which also provide residential accommodation for the borrower (or close relative/connected person) with an area greater than 40% of the total property. These are semi-commercial loans and we can put you in touch with an FSA regulated broker to arrange such finance.