Saffron Building Society has launched a development finance loan product for customers seeking a loan of between £150,000 and £500,000 to develop a residential property.
The loan, for customers seeking to renovate a house to sell on the open market, or for those looking to build from scratch, is being added to Saffron’s existing range, which is already available for larger project financing beyond £500,000.
Under the new product, loans are available at either 75 per cent of the project costs, or 65 per cent of the purchase price, whichever is the lower, with interest rates starting from 1 per cent per month. There is an arrangement fee of 2 per cent and exit fees to pay of 1 per cent.
“Our customers like the fact that we take a personal interest in their projects and provide ongoing advice, guidance and support throughout the complete development process,” said Peter Owen, head of property development at Saffron Building Society.
“We don’t just lend and walk away, we are dedicated to the project and we visit the site to ensure we support our customers as the project progresses. We offer regular assistance wherever possible to enable them to overcome potential issues, such as unavoidable cost and time overruns.”
The mutual said many of its customers stayed remain with the lender to ask for support on subsequent projects, which it believed was an endorsement of the service it offered.
“For us, it’s not just about finance,” Mr Owen added. “It’s about lending our years of experience to help our customers achieve a successful outcome.”
The mutual said that fixed legal costs are typically priced at £1,200 for a single titled property and the society’s internal quantity surveyor monitors all sites to ensure there are no external monitoring fees to be paid. Personal guarantees are required for loans to limited companies.
Eligible loans will be extended for residential new build flats and houses, conversions, renovations and extensions and potentially, to part-completed sites.
Carl Shave, a director at Ipswich-based Just Mortgage Brokers, said: “With smaller development finance harder to come by in the market this introduction from Saffron is a good addition to the fold.
“With their product being fairly representative of other types of funding schemes available, the lenders support for applicants including their dedicated relationship manager throughout the build will be a good selling point to those needing the extra guidance.”
