Gross Development Value (GDV)

The Gross Development Value or GDV is the estimated total value of the completed development. The value is prior to any sales or refinancing cost deductions such as legal fees, or estate agency fees.

The Gross Development Value or GDV is an important metric when assessing the financial viability of a development and how much a developer is able to borrow.

Net Development Value (NDV)

The Net Development Value or NDV is the estimated total value of the completed development less any sales or refinancing cost deductions such as legal fees, or estate agency fees.

Profit On Costs

The Profit on Costs metric is calculation to determine the amount of profit a development project makes as a percentage of the total development costs.

Profit / Total Costs incl. Interest & Fees = Profit On Costs

This calculation is an important metric when assessing the viability of a project. While developers profit on costs targets vary, anything above 15% is typically regarded as acceptable.

Profit On Gross Development Value (GDV)

Similar in nature to the Profit on Cost metric, the Profit on Gross Development Value metric is a calculation to determine the amount of profit a development project makes as a percentage of the gross development value (GDV).

Profit / Gross Development Value = Profit On Gross Development Value

This calculation is an important metric when assessing the viability of a project. While developers profit on gross development value targets vary, anything above 10% is typically regarded as acceptable.

Bridging Finance

Bridging finance is typically used as a short-term funding solution to quickly secure property purchases, generate cash flow for business purposes, or enhance a property's value through refurbishment.

Bridging loans are secured against property including residential, commercial, industrial and land.

Development Finance

Development Finance is used by property developers to fund the construction costs, professional fees and in most cases, part of the land purchase price. Project types include new builds, refurbishments and conversions.

Arrangement Fee

An Arrangement Fee is a fee levied on borrowers to cover the administrative expenses, underwriting, and processing involved in a bridging or development loan application. Typically, this fee ranges from 1% to 2% of the total loan amount and is payable only if the loan successful completes.

Broker / Introducer Fee

A Broker or Introducer Fee is a fee paid to a broker or an introducer for their services in facilitating or arranging a bridging or development loan. The fee compensates the broker or introducer for their role in connecting borrower with a lender and assisting in the loan application process.

Broker or Introducer Fees range from 1% to 2% of the total loan amount and is payable only if the loan successful completes.

Charge

A charge is the legal registration of a lender's interest when using a property as security for a loan. Recorded with the Land Registry, the charge ensures that the borrower cannot sell the property or secure additional borrowing without first repaying the debt to the lender.

A charge protects a lender's interest under the loan agreement and gives them the ability to recover the debt if necessary.

Second Charge Loans

Second charges loans rank behind first charge loans. This means first charge lenders are entitled to recover their debt before the second charge lenders. Since second charge loans are subordinate to first charge loans, second charge loans carry more risk and therefore a higher interest rate.

Daily Interest

Interest is charged monthly but calculated daily . This ensures the correct amount of interest is charged when the loan is repaid.

Open Bridge

An open bridge is a bridging loan with no predetermined exit strategy whether this is via a sale or refinance. The loan repayment or exit is therefore yet to be confirmed. Open bridges are typically regarded as more risky than closed bridges.

Closed Bridge

A closed bridge is a bridging loan with a legally binding exit strategy in place. A closed bridge could be a contracted sale to a reputable buyer or a credit approved refinance. Closed bridges are typically regarded as less risky than open bridges and therefore favoured by lenders.

FCA Regulated Mortgage

A regulated loan, as defined by the Financial Conduct Authority (FCA), is a loan that is secured against a residential property or properties where the borrower or immediate family lives, has lived, or intends to live.

There are a number of exceptions to this rule, including: if the loan is a second charge; if the loan is for business purposes, i.e., the borrower is a business; or if the area in which the borrower or immediate family lives, has lived, or intends to live is less than 40% of the total area of the property.

Please note, Telos Capital does not offer regulated mortgages.