The product – nicknamed the ‘Castro loan’ by the underwriting team at Vitvo – offers advantages to developer borrowers who are approaching the end of a development loan funded project, and prior to the practical completion.
The key issue for the borrower was the urgent need to refinance to avoid onerous penalty payments triggered by the scheme over running.
The scheme wasn’t at a stage of practical completion, as one part of the development still needed a considerable amount of work, including the installation of windows, kitchens and general plastering and decoration.
Ian Wilson, CEO of Vitvo (pictured above), said: “Although there was a considerable amount of work left to do on-site, we took the view that the project was essentially in the light refurbishment stage and the major development risks had been overcome.
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“On this basis, we were happy to lend at a much earlier stage than other lenders, who typically require practical completion to have been reached.
“Our general approach at Vitvo is never to adopt a tick-box mentality towards underwriting; we always take a pragmatic view of the actual risks in making any loan.
“The Castro loan is a great example of this.
“It allows seasoned developers with a sound track record and using skilled professionals throughout the development process to manage their finances and operations optimally, saving both time and money.”
The loan was provided at 57% LTV.
Key features of the Castro loan include:
- up to £1.25m for single property security, £2m for multi-unit security
- up to 70% LTV
- maximum 12 months
- no exit fees
- no personal guarantees required for sole traders
- previous credit impairment considered.