Please note: with the market changing so quickly due to the current Covid-19 Pandemic, the content could be out of date at the time of listening.

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A is for ASK. 

As an Investor/Developer, you need to be questioning everything, especially as everyone will be questioning you! The most important thing to do is question everything so that you understand everything, there is nothing worse than not understanding the finance that you are raising. Whether it is a BTL Mortgage, an HMO Mortgage, a Bridging Loan or a Development Loan, you need to understand what you are getting into and most importantly how to get out. 

You should always be asking the following questions of your Broker/Lender (this is not an exhaustive list!): - 

1. What are the costs involved in getting the finance? (what are the arrangement fees? What is the interest rate? What is the ERC/Exit Fee? What is the Broker Fee?)

2. How long is the facility? (what happens if you overrun? Will they repossess, or will they extend the term? What are the fees associated with extending the facility?) 

3. When are the funds released? How quickly are they released? (this is more relevant to Development Finance that is released in tranches, but still a very important point when you are trying to cashflow projects)

4. What is your personal exposure and the LTD co exposure? (i.e what is the Personal Guarantee you will need to give, and does the Lender want a Debenture over your LTD Co?)

5. What is the Lender’s security? Will they have a first charge over the property, a second charge over the property or even a mixture of charges over your portfolio?

6. What is the exit? Are you going to sell the property or are you going to need to refinance? How will you mitigate the risks of the sale taking a long time? What if you cannot refinance the property? Will you able to pre-sell any of the units? 

7. Why are you going for this product? Is it the best product available to you on the market? Is there a cheaper alternative out there? Is there a product better suited to your needs?

8. What is the process? What will the Credit process involve? How long will the process take? 

9. Do you need a Valuation? Do you need a Quantity Surveyor? Do you need a Monitoring Surveyor? Will the Lender want to meet you prior to Lending?

10.  Are there any restrictions on the lending? For example, could you use the property as an HMO or Serviced Accommodation? Will the Lender allow you to get Tenants in place before you refinance off of Development Finance? 

As you can see, there is a lot to get your head around when trying to raise finance, and this is why asking the right questions is so important.