Pre-Planning Finance
UK Commercial and Development Finance offers a ‘Holding loan’ with up to 65% LTV, an 18-month term, and competitive rates (0.89% to 1.25%). Navigate with flexible exit strategies, cautious risk considerations, and a focus on timing and comprehensive planning as your trusted financial partner in the pre-planning phase.
Pre-planning Finance with UK Commercial and Development Finance
What is Pre-Planning Finance?
Pre-Planning Finance, often referred to as a ‘Holding loan,’ is a financial product designed to raise capital for the acquisition of land that has not yet obtained granted planning permission for development. This unique financing solution provides the flexibility to secure land or property with the potential for redevelopment or the construction of new dwellings.
What to Expect?
- Maximum Loan-to-Value (LTV): Typically up to 65% of the land/property value.
- Lending Term: Up to 18 months.
- No Early Repayment Penalties: Experience the freedom to repay your loan without additional charges.
- Lending Rates: Competitive rates ranging from 0.89% to 1.25%, contingent on project value, risk, builder/developer experience, collateral, and the type of planning application.
Lender Fees:
- Typically 2%-3% of the net loan advance.
- Additional fees may include valuation fees and legal fees (both yours and the lender’s).
Other Things to Consider:
Exit Strategies:
- Refinance onto Development Finance: The primary strategy is to refinance onto a development finance product.
- Sale of Land/Property: Consider selling the land/property with planning consent granted.
- Use of Cash or Sale of Other Assets: Explore the option of utilizing cash reserves or selling other assets.
Risks & Fees:
- Cash Liquidity: Consider maintaining cash liquidity to address potential issues arising from the planning application. This includes changes to plans and potential time extensions beyond the agreed term.
- Professional Fees: Account for professional fees, including valuation fees, insurance, and legal fees associated with both the finance product and the planning application.
- Interest Accumulation: Factor in the interest accumulation on the finance arrangement when calculating overall costs and assessing the impact on profit margins.
Timing:
- Approval Confidence: Are you confident that the planning application will be approved within the lending term offered by the finance lender?
- Comprehensive Planning: Have you covered all eventualities with your architect and consulted with a town planner to ensure your development plans align with the requirements for approval?
- Project Timeline: Have you allowed sufficient time for other projects to be completed before commencing work once planning consent is granted, and funding is ready for the development?
Embark on your pre-planning journey with UK Commercial and Development Finance, where we offer tailored solutions to meet your unique financing needs. Whether you’re acquiring land for future development or navigating the complexities of planning, trust us to be your financial partner in success.
Key Takeaways
- Maximum Loan-to-Value (LTV): Up to 65%.
- Lending Term: Up to 18 months.
- Competitive Rates: Ranging from 0.89% to 1.25%.
- Exit Strategies: Refinance onto development finance, sale of land/property, or use of cash/sale of other assets.
- Risks & Fees: Consider cash liquidity, professional fees, and interest accumulation.
- Timing: Confidence in planning approval within the lender’s term, comprehensive planning, and project timeline considerations.
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