The business has streamlined the lending process and, unlike separate mezzanine structures, it only requires one valuation, solicitor, monitoring surveyor and point of contact.
The lender’s new ‘development 90’ product offers loans between £500,000 and £3m — a space which James Bloom, director at Alternative Bridging Corporation (featured in the video, above) believes is underserved by smaller lenders and larger banks.
“We think we’re filling a niche in the market and making our introducers’ and clients’ lives a lot easier by having access to a stretched product without having to go to [both] a senior and mezz provider,” said James.
“We’re really excited because we’re told that there’s a big gap in the market for medium-sized projects, and we hope that this is going to fill [it] quite nicely.”
The new offering allows developers who are seeking to expand their current activities, or looking to undertake larger schemes, to avoid expensive joint venture structures or reliance on sales from other schemes to finance their equity.
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James highlighted that, while there’s nothing wrong with developers being ambitious and wanting to grow the size and complexities of their projects, he warned: “don’t run before you can walk”.
“I’ve been doing development finance for more years than I care to remember, and the most successful [developers] are those that have [natural] progression,” he stipulated, advising they should move forward at a “sensible pace”.
He urged developers to stick to areas they know geographically so that they can lean on their local knowledge.
“I think that the common misconception is, ‘If I build one house, I’ll make £100,000 profit, therefore if I do a scheme of 10, I’ll make £1m.’"
He said that, in theory, this may be correct, but there are still a lot of stages a developer needs to go through and consider.
When discussing what other products brokers can expect Alternative Bridging Corporation to unveil this year, James teased that it will be cutting its bridging finance rate to start from 0.65% per month, and increasing its first- and second-charge bridging LTVs to 70% and 65% respectively.
The lender will also be bringing back its three-to-five-year term product.
The full interview with James can be watched below.