Lending levels are assessed against a borrower’s gross development value (GDV) – the value of the property once finished – with funds being released at stages throughout the refurbishment works.
This differs from standard bridging loans, which are based on loan-to-value (LTV) calculations. Although a maximum loan-to-value of 70% still applies.
Interest on the new product, set between 0.92% and 1.1% per month, is rolled up and charged as a total amount at the end of the term.
The product is available on loans between £100,000 and £2m on terms of up to 18 months.
Director of development finance Steve Larkin (pictured) said: “These [products] will appeal to the type of property professional for whom an LTV-based bridging loan is not flexible enough, yet who doesn’t need a full development loan for their relatively straightforward refurbishment project. Basing our refurbishment loans on GDV not LTV means more leverage for the developer and less capital needed upfront.”