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Traditional senior debt funding

Traditional senior debt funding

In essence this is the standard development product available from the mainstream, commercial banks.  It is the most conservative product in the market and is generally restricted to 55-60% of the gross development value (GDV) – the trade-off is that it is also the lowest priced product in the market. Typically, you would be looking at lender fees of 1% – 1.25% entry fee, an interest rate of 4.5-5%pa and an exit fee of 1% of loan (not GDV).

As well as the low gearing against the project costs these lenders will also want a full application to cover the borrower’s financial profile, a track record of successfully completing previous projects of a similar nature and demonstrating the liquid cash to cover the client’s 40% input into the transaction (i.e. an equity gain on a site by obtaining planning or by simply holding it over a number of years will not be taken in lieu of an actual cash injection).

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