At Finbud we like to make life simple for both our clients and our panel of lenders. Therefore, we only submit applications, once we have fully packaged them. This ensures there is enough information available for the chosen lender to make an informed decision on the application promptly.
The benefit for you as a client, is that your application will be evaluated quickly. If the end result is favourable, then you are able to proceed quickly to secure the project site. If, for any reason, it is unsuccessful, it makes it possible for us to respond quickly, seeking an alternative lender or finance route for you. In any event, sellers and agents are not too keen on setbacks or delays, so we constantly look to secure finance as fast as possible.
Read on to learn more about the documentation required for development finance applications .
Evidence of Deposit, ID and Residence
Evidence of deposit, ID and residence are constantly needed to satisfy the lender’s anti-money laundering regulation. It is best practice to offer this information either upfront or as soon as possible to prevent delays further down the line.
A Full Breakdown of costs
A detailed breakdown of costs is vital. Although a lender may take the headline amounts to begin with, it is far better to give more detail when at all possible. It is only when the lender sees a thorough breakdown will they really have the ability to sense-check the amounts. Additionally, without the entire breakdown, draw down schedules are impossible to evaluate.
Details of Your development Experience and your CV
A development CV, together with evidence of expertise in the development property sector is essential to many lenders. Even when you are an inexperienced developer, a CV detailing your experience in different areas of work is quite useful.
By highlighting your authenticity upfront, the creditor will feel more comfortable in your ability to deal with the project in question. In instances where the development lender is finding it difficult to get comfortable with you on a project, it is all but impossible to drive down the cost by a substantial margin.
Detailed Information of Any Planning Restrictions and Any CIL payments or S.106
Planning restrictions and CIL (Community Infrastructure Levy) payments are important factors to consider. CIL is of critical importance and where the necessary payment is big, it is going to influence the profit margin of the project as a whole.
Details of any Drawings and Planning permission
Providing the planning details will allow both us as the broker and your lender to better understand the development project proposed.
By working through the planning documents, such as the drawings, the lender can obtain a better idea of what the finished project will look like and can utilize this information to check that the quoted costs are accurate.
The composition of the team ( Contractors, Architects, etc)
The staff you are opting to work with will impact a lenders willingness to lend you money. Reputational weakness, previous failed advancements or a lack of expertise can result in problems later down the line.
The flip side to this is that a solid team, with a solid reputation and good track record may reinforce your application. Outline exactly who you are dealing with upfront to prevent any delays and queries at a later stage.
Schedule of Works Broken Down by stage
By breaking down the schedule of works in detail and also by stage, the strategy for the project will become more visible. You will find that arrangement of stage payments will be easier if you combine the data in the plans, the complete breakdown of costs and the schedule of works.
Asset, Liability, Income and expenditure summary
Every lender would like to see an asset, liability, income and expenditure (ALIE) outline before approving an application. It is necessary that you supply a completed ALIE as soon as possible in the application process.
There are two main reasons for the lender needing an ALIE. Firstly, is that throughout the build your earnings may drop or perhaps even cease. If that is the situation, the lender will be eager to obtain an assurance from you that you can support yourself and to understand to what extent you are able to absorb delays or unforeseen expenses.
The second motive is to assess your ability to support a personal guarantee for any application made through a corporate structure. Most lenders will want you to have the ability to support 20 % of the loan amount in personal assurance, backed by adequate resources.
Estimated Gross Development Value
The gross development value (GDV) is yet another significant element in deciding if the loan is likely to be agreed or declined. The GDV is generally expected to be 20% greater than the whole project cost. GDV should be endorsed by the view of a couple of local agents, and ideally with similar conclusions backed by evidence, if available.
Details of your Exit strategy
A good exit strategy is a key factor to successful development. You will need to be certain your plan is viable whether your goal is to let the property or sell it.
As the term of the property development loan finishes, the lending institution is going to want to know they are protected when it comes to receiving their money back. If you are interested in selling, you need to assess the demand upfront and comprehend the length of time that is required for your development to sell.