Although us brokers like to save you time and money we cannot arrange finance for you that is free. At the same time we know that borrowers are not keen on paying for lender costs and certainly want to keep them to a minimum. With any Search House Plans By Roof Pitch finance application you will have to pay fees for the following:
Valuations. Any lender will need to check the figures for the current and end value of your building project. Although you will have done your own research and will have a good idea of the likely Gross Development Value of the site the lender cannot and will not take your word for it. Loan to value plays an important part in the underwriting process and so a difference in opinion of value can be a deal breaker. With this in mind it is important that your figures are realistic so that you do not waste your time searching with us, for building finance. The cost of the valuation will vary depending on the sort of property being valued but most lenders will only charge you the cost of the report, which would typically be A�1 per A�’000 of property value.
Specialist reports. Most lenders will employ the services of either an Engineer or a Quantity Surveyor. These professionals will carry out various reports to assist with underwriting of a project. The Garden Design Front Of House finance provider will be an expert in lending money but not necessarily in the actual build process so a helping hand is often required. Again, the borrower will need to cover this cost but it can also be of use to the client as an Engineer, for example may point out issues that are better sorted at the start than the end of a build.
Arrangement Fees. Although some bridging lenders will not have an arrangement fee the vast majority do as will all specialist development finance lenders. Typically fees will be 1.5 – 2% and is normally added to the loan, being charged on completion. Some lenders will want to take part of their fee on acceptance of offer or to progress an application beyond agreement in principle, just so they know you are serious about taking their finance. Arrangement fees are an industry standard and should just be looked at as an inevitable cost of borrowing money. You are building or converting a property to make a profit but you cannot forget that the lenders providing the money you need also want make a profit.
Exit is another industry standard. Specialist providers generally lend over a relatively short period of time and to make the exercise profitable will want to charge a fee for you to exit the facility. This is one area of finance that can vary quite widely and is a very important consideration when choosing a product. Some lenders will want to take 2% of the Gross Development Value, for example, while others will take an additional months interest. This can have a huge impact on the overall cost of finance as highlighted here. Lenders charging a percentage of G.D.V. will attract clients with lower interest rates but the cost of the facility as a whole can be the same, if not more, than a higher interest loan due to the amount of money paid out at the end of the loan period.
Fees to borrow money are not new and will not be going away, you have to remember that if you want the funding you need to pay the lenders’ costs.
So, while you want to keep your construction finance costs as low as possible you should recognise that a profit of tens of thousands or even hundreds of thousands of pounds is worth paying for – that said there is no point paying unnecessarily high costs so get in touch with a broker and find out how they could save your project money and add to your profitability.
Construction