A personal guarantee is a legally binding agreement between the Borrower and the Lender to say that the Directors/Shareholders will be liable for paying the debt of the Limited company if it is unable to do so. This Guarantee normally does not come with any supporting security, however, depending on the case, the Lender may ask for supporting security. This may come in the form of a charge over the Guarantor’s main residence or other assets.
In situations where the purchase price is significantly below the market value, then yes it could potentially be obtained. This usually happens when the vendor needs to sell a property quickly and a discounted purchase price has been negotiated. Though lending, in this case, is more often considered against the purchase price rather than the market value, there are some who are also comfortable lending against the latter!
MV – Market Value: How much the property is currently valued at.
BMV – Below Market Value: If the property is being sold for less than the current Market Value.
OMV – Open Market Value: The price at which an asset would trade on the open market.
GDV – Gross Development Value: The value of the property after works have been completed.
LTV – Loan to Value: The ratio between the value of the loan you take out and the value of the property as a whole, expressed as a percentage.
LTGDV – Loan to Gross Development Value: The ratio between the value of the loan you take out against the expected value of the property after works, expressed as a percentage.
LTC – Loan to Cost: Measures the ratio between the total loan amount and ‘cost’ of the project which can include purchase price and cost of works.
DIP – Decision In Principle: Same as Agreement in Principle, shows a lender has indicatively agreed to lend to you should you accept their offer.
AIP – Agreement In Principle: Same as Decision in Principle, shows a lender has indicatively agreed to lend to you should you accept their offer.
SALIE – Statements of Assets, Liabilities, Income and Expenditure: An overview of the client’s financial status.
AST – Assured Shorthold Tenancy: A type of tenancy agreement generally used by private landlords.
SPV – Special Purpose Vehicle: A special purpose vehicle, also called a special purpose entity (SPE), is a subsidiary created by a parent company to isolate financial risk. Its legal status as a separate company makes its obligations secure even if the parent company goes bankrupt.
BRR – Buy, Refurbish, Refinance.
HMO – House of Multiple Occupancy: A residential property where more than three or more tenants, forming more than one household, occupy the property.
JV – Joint Venture: a project undertaken jointly by two or more parties which otherwise retain their distinct identities.
QS – Quantity Surveyor: A construction industry professional with expert knowledge in construction costs and contracts. Usually employed by the Lender to check over your build costs and to assist with monitoring during the construction.
MS – Monitoring Surveyor: A construction industry professional with expert knowledge in construction costs and contracts. Usually employed by the Lender to check to assist with monitoring during the construction.
PG – Personal Guarantee: refers to an individual’s legal promise to repay credit issued to a business for which they serve as an executive or partner. Providing a personal guarantee means that if the business becomes unable to repay the debt, the individual assumes personal responsibility for the balance (Investopedia).
ERC – Early Redemption Charge: a fee you might be required to pay when redeeming your loan. Also known as Redemption Fee. Most Lenders will have an Early Repayment Charge if redemption occurs during their fixed term period.
Enquiry submitted to TPFC via the form on the website or Mobile app
A Case manager picks up the enquiry and reviews the provided information to make sure nothing is missing and to gain a full understanding of the deal
The Deal is packaged and sent to relevant lenders
Lenders will respond with their offer Agreement in Principle (AIP)
The Case Manager compiles a spreadsheet of all the AIPs that we receive from Lenders, which will be sent for you to review
Once you have chosen the lender you wish to proceed with, the case manager will send you the relevant paperwork to complete, these generally include: Application Form, Property Portfolio and Assets and Liabilities Statement. They may also need photographic I.D, proof of address, 3 months worth of bank statements, credit report and a schedule of the proposed works
Lender will then get valuation quotes and availability and you then choose who you would like to go with and pay the relevant fee
The Valuer will then send a report to the Lender for a review and the Lender will send you an offer letter if they are happy with the Valuation
Solicitors will then be instructed, you will have to pay fees for your own solicitor as well as the Lender’s solicitor. Top Tip: Make sure you choose a solicitor local to you as you will have to go into the solicitor’s office to sign documentation. You also need to use a Solicitor’s Firm with at least 2 SRA Partners
The Case Manager will then liaise with you and the Lender to make sure that the legals are completed as quickly and efficiently as possible
Once the legals have been completed then the funds will be sent to your solicitor
So that the lenders can get a good understanding of previous experiences, history, background in the industry and the scale of projects you’ve carried out. They also like to know about your team and their experiences and background in the industry. This is because 99% of the time, your team will be delivering the project rather than you.
A company that doesn’t desert you when things don’t go quite to plan…
Great Company and Michael was always there to help when needed. Didn’t go smoothly as the Scottish land registry closed during the pandemic. This didn’t cause any issues for Michael even though we’ve just completed over 3 months down the line. Michael smoothed everything over with the bridging company that were threatening to charge extra interest as we’d agreed a date for the money to transfer.