Making Yourself Lendable
For the average property investor, making yourself lendable is easier than making yourself investable depending on personal circumstances; if you have bad credit, CCJs, bankruptcy etc. When it comes to talking about bridging finance, development finance and commercial mortgages, all of these products are asset-based products so the lenders are lending first and foremost on the asset rather than the borrower.
If we take a bridging loan for example, they’ll look at the deal first. If the deal stacks and up and the deal is good they’ll take it to the second stage which is obviously where they begin to look at yourself. So the first part of making yourself lendable is find a good deal, a deal that is almost impossible to refuse. A good deal will have a good profit on cost or good profit on GDV, approximately 15%-20% possibly 25% if it stacks up. It’s important to get that profit in place so that you’re not leaving money in the deal and you are able to recycle your deposit again to allow you to carry on investing onto something else.
Afterwards lenders will look into you and the team around you. They may look at your past credit, your past experience, if you’ve got CCJs or bankruptcies. Because the products are asset-based lending, lenders may make an exception if the deal is very, very good. In terms of looking at your team they’ll look at the people that you’ve got around you delivering the project, such as contractors and project managers. Make sure that they are liquid, by that I mean they have enough money to be able to support themselves and possibly you as well through the development. Once they’re comfortable with you and the team around you, there’s not much standing in your way at this point to make yourself lendable.
Bridging, Development and Commercial Mortgages are asset-based
Make the deal irresistible, impossible to refuse, a profit to cost of 15%-25%
Although exceptions can be made, ensure yourself and your credit are as clean as possible.
Have and use a well experienced and liquid team
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Written by Michael Primrose & Christopher Yong