Unlocking a £3.1m Development Project Despite Structure & Timing Challenges

The Client’s Situation

Two existing clients approached us for development finance on a site they already owned. Their objectives were to refinance an existing bridging loan and fund the completion of a new residential scheme.

The site had full planning consent for 9 new-build homes alongside the refurbishment of an existing property – creating 10 units in total for sale upon completion.

• Site value: £1.3m
• Outstanding bridge: ~£660k
• Build costs: £1.95m (+10% contingency)
• GDV: £4.225m

.

The Challenge

Despite strong developer experience and a proven track record in the local area, two key issues complicated the deal:

1. Contractor timing vs. bridge deadline
The bridging loan required repayment before a main contractor could be formally appointed. Most lenders require a fixed build contract pre-completion, creating a funding gap risk.

2. Loan-to-GDV constraints
The required facility exceeded typical market LTGDV limits based on the scheme alone. This raised concerns around exit viability and lender risk.

.

Our Solution

We leveraged the client’s track record and deep knowledge of local build costs to structure a flexible solution.

• Secured a lender willing to proceed without a signed build contract at completion, subject to funds for works being released only once a JCT contract was in place
• Enabled immediate repayment of the bridging loan, avoiding costly extension fees
• Strengthened the deal by adding £210k of unencumbered property as additional security, reducing leverage concerns
• Minor remaining shortfall covered by the client

.

The Result

Following valuation and monitoring reports that aligned with projections, the lender issued terms:

• £645,000 day-one net advance (with £15,000 client contribution)
• £2.15m development facility
• £307,000 interest and fees
• £3.1m total facility at 70% LTGDV (blended across site + additional security)
• An 18-month term provided

Post-completion, the client appointed a contractor within 4 weeks at a fixed £1.95m, validating the initial underwriting assumptions and common-sense approach to lending.

This deal demonstrates how pragmatic structuring and lender flexibility can unlock complex developments – balancing risk, meeting tight timelines, and maximising overall project viability.

.

.

How can Advocate Finance help?

We provide a FREE assessment of all our services.

Please contact me directly for more information, or use the Get in Touch With Us Today feature at the bottom of this page.