The London-based bridging lender’s product allows the early release of as much equity as possible, enabling the developer to move on to a new project without delay.
The key features of Vitvo’s flexible development exit loan are:
• maximum £1.25m for single property security, £2m for multi-unit security
• up to 70% LTV
• maximum 12 months
• no exit fees
• previous credit impairment considered.
“As everyone knows, as a development completes, the developer’s aim is not just to pay off their current development loan; it’s as much about quickly releasing the maximum amount of cash for the next scheme,” said Ian Wilson, CEO of Vitvo (pictured above).
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“At the end of a development, a developer is impatient to move on and not have building crews standing idle.
“We empathise with this business need.
“Vitvo’s job is to help them make that transition as fast and easy as possible.”
Ken Purchase, head of underwriting at Vitvo, said that too often it found other lenders adopting a tick-box mentality towards development exit loans in order to approve them.
“This mentality focuses not only on ensuring that the main development risks no longer exist, but also that each and every minor issue in relation to the site has been resolved and every bit of paper completed ahead of drawdown.
“As every developer knows, the end of a development simply doesn’t look like this.”
“Our approach is not to allow the fact that some aspects of the site are incomplete to inhibit making a loan.
“So it’s really useful if a developer is in an expensive development product or is about to incur late payment penalties because a project timetable hasn’t gone quite to plan.”
Post-drawdown, Vitvo also permits further equity release as developed units are sold off.
Prior to drawdown, it will agree with the developer a minimum percentage of the proceeds of unit sales to be earmarked to pay down the prospective loan.
This will typically be 25-30% of any sale proceeds – more on low LTV deals – so allowing the developer better cash flow for its business.
“The key issue for us is that we do not want a situation where the LTV of our loan increases during the life of the loan,” said Ken.
“Subject to that overriding constraint we are happy to agree sale proceeds splits that enable the developer to extract equity from each and every sale.”