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Flexible Lending Options for Property Developers

FLEXIBLE LENDING OPTIONS FOR PROPERTY DEVELOPERS SECURING FINANCE FROM MAINSTREAM LENDERS HAS BECOME INCREASINGLY DIFFICULT, DUE TO THEIR LACK OF APPETITE IN THE CURRENT CLIMATE. THERE HAS BEEN A GROWING MARKET FOR MORE FLEXIBLE AND ALTERNATIVE S OURCES OF LENDING DUE TO THIS AVERSION. HERE ARE A FEW OF THE OPTIONS AVAILABLE TO PROPERTY DEVELOPERS WHEN LOOKING TO FUND UPCOMING PROJECTS. EQUITY CROWDFUNDING INVESTORS CAN POOL RESOURCES IN LARGE NUMBERS, LIMITING CROWDFUNDING DEALS ACCOUNTED FOR POTENTIAL RISKS BY TEAMING UP 18% WITH LIKE-MINDED INDIVIDUALS FOR A DEVELOPMENT PROJECT OF COMMERCIAL LENDING IN 2014. THAT WOULD OTHERWISE BE OUT OF THEIR REACH INDIVIDUALLY. EXAMPLES OF CROWDFUNDING SITES INCLUDE: THEHOUSECROWD.COM PROPERTYMOOSE.CO.UK PEER TO PEER (P2P) THE P2P INDUSTRY IS PEER TO PEER PLATFORMS NOW REGULATED BY SUCH AS FUNDING CIRCLE THE FINANCIAL CONDUCT AUTHORITY. PROVIDE CAN OFFER UNSECURED AND SECURED LOANS TO BORROWERS. AN ALTERNATIVE TO BORROWING FROM A MAINSTREAM BANK. INVESTORS TEN YEARS SINCE OPENING ITS DOORS ZOPA, THE FIRST PEER TO PEER LENDER, IS EXPECTED TO SURPASS £1BN WORTH OF LOANS IN 2015. BRIDGING AND SHORT TERM SHORT TERM LENDING OPTION KNOWN FOR ITS FLUIDITY AND FLEXIBILITY, IT CAN BE SET UP WITHIN A SHORT PERIOD OF TIME BY AN INDIVIDUAL OR ORGANISATION. SECURED AGAINST EITHER RESIDENTIAL OR COMMERCIAL PROPERTY, TRADITIONALLY IT WORKS TO BRIDGE THE GAP BETWEEN A PURCHASE AND A REFINANCE ON SALE. HOWEVER IT CAN PROVIDE A 12-18 MONTH OPTION FOR DEVELOPERS. SOME BRIDGING FINANCE PROVIDERS CAN BE REGULATED BY THE FINANCIAL CONDUCT AUTHORITY (ENABLING SELF-BUILD PROJECTS TO BE UNDERTAKEN) AND MEMBERS OF THE COUNCIL OF MORTGAGE LENDERS. REMORTGAGE A TRIED AND TESTED FORM OF LENDING THAT INVOLVES: SWITCHING LENDERS AND PAYING OFF OUTSTANDING LOANS BY TAKING OUT A NEW LOAN AGAINST AN ASSET SO AS TO RAISE CAPITAL. SINCE 2009 THE BASE RATE IN THE 0.5% UK HAS BEEN AT A RECORD LOW OF MEZZANINE FINANCE DEVELOPERS IN THE LATER STAGES OF A PROJECT CAN LEVERAGE EQUITY IN THEIR UNFINISHED PROJECT THROUGH MEZZANINE FINANCE. ALTERNATIVELY, IT 3 CAN BE USED TO FINANCE THE EXPANSION OF AN EXISTING ORGANISATION. HOWEVER INVESTORS CAN CONVERT THE LOAN TO OWNERSHIP OR EQUITY INTEREST IF IT IS MEZZANINE FINANCE CAN PROVIDE PROPERTY OWNERS WITH FAST AND FLEXIBLE FUNDS. NOT PAID BACK IN FULL OR ON TIME. BEING ABLE TO RELEASE EQUITY WITHOUT INCURRING SALE-RELATED TAX LIABILITIES MEANS THAT PROPERTY OWNERS CAN USE MEZZANINE FINANCE TO BENEFIT FROM EQUITY GENERATED IN A PORTFOLIO. SOURCES HTTP://BRITISH-BUSINESS-BANK.CO.UK/WP-CONTENT/UPLOADS /2015/03/230315-EQUITY-CROWDFUNDİNG-REPORT-FİNAL.PDF HTTP://wwW.BANKOFENGLAND.CO.UK/PUBLICATIONS/ DOCUMENTS/OTHER/MONETARY/TRENDSOCTOBER14.PDF HTTP://www.CBI.ORG.UK/MEDIA/2072014/CBI_ALTERNATIVE FINANCE GUIDE_FOR_GROWING_BUSINESSÉS_EMBARGOED_0001 200513.PDF HTTP://www.THEGUARDIAN.COM/MONEY/2015/MAR/06/ PEER-TO-PEER-LENDING-P2P-RETURNS-INVESTMENT AFFIRMATIVE

Flexible Lending Options for Property Developers

shared by scottbeaman on Aug 18
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As the financial climate drives mainstream lending to a point of relative stagnation, most mainstream banks require developers to demonstrate strong credentials before they will even begin a discussio...

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