Paul Green

Hodge Bank launches development product for smaller projects



Hodge Bank is set to launch development loans this week for experienced developers who are looking to fund smaller projects.

The specialist bank — which already offers loans on projects between £1m and £15m — will be offering finance from £500,000–£2m to individuals, partnerships and limited companies for different types of development projects.

This can include new builds, residential conversions or refurbishment projects, as well as commercial or mixed-use sites.

Hodge will fund up to 65% of GDV or 80% of LTC, with terms of up to 24 months.

Security includes: 

  • first legal charge over freehold or leasehold (leaseholds to have a minimum of 125 years remaining at completion)
  • debenture incorporating charge over relevant contracts where applicable
  • interest cover and cost overrun guarantee
  • warranties from consultants/sub-contractors, where design responsibility exists
  • new homes warranty (residential)
     

In an exclusive interview with Development Finance Today, Paul Green, head of development finance at Hodge Bank (pictured above), claimed that a typical experienced developer doesn’t want the complication of the security requirements that are necessary at a core lending level.

“So, what we've looked to do is get rid of all of that.

“They'll have a short form facility letter, guarantees, debenture and, if they can demonstrate their ability to manage contracts, we're absolutely happy to do [the loan].

“And I think there may be reluctancy within other banks to enter that kind of contract procurement method, so we see that as another plus point.”

Hodge claims that it can offer an agreement in principle in 48 hours and arrange work-in-progress payments within five days of surveyor valuations.


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