Property Funding FAQ
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WHAT ARE THE TYPE & SIZE OF RESIDENTIAL DEVELOPMENTS BEING FUNDED?
CALMEZ is seeking developers of new residential developments of up to 10 houses with total sales values ranging from £500K GDV to £3M GDV
WHAT IS MEZZANINE DEVELOPMENT FUNDING?
It is the difference between the total cost of a development (including the cost of the land) less the amount the prime bank lender is prepared to lend (1st charge)
WHAT HAPPENS IF I PROVIDE SOME OF THE EQUITY?
Where you provide some of the equity, this reduces the amount of mezzanine funding that is required. This will result in CALMEZ offering you a larger share in the final profit distribution than would be the case if you do not contribute any equity.
WHAT PERSONAL GUARANTEES ARE REQUIRED?
Your personal guarantees are limited to cover the value of the cost overruns only. This guarantee strengthens your build cost warranty and offers the lenders protection against any cost overruns.HOW LONG WILL IT TAKE TO APPROVE AN APPLICATION?
We will approve the application in a week and expect to have the funding approved within 4 weeks.
CAN I USE MY OWN CONTRACTORS OR MUST I USE YOURS?
We are more than happy for you to use your own contractors provided you have not had previous problems with them and we can see some previously completed projects and they are NHBS/Zurich registered.
WHAT HAPPENS IF I IMPROVE THE PROFITABILITY BY REDUCING BUILD COSTS AND / OR HIGHER SALES PRICES?
CALMEZ calculates its profit share on the projected figures submitted by you to us (and the prime lender) and this profit share is then expressed as a Sterling amount and not a percentage in our loan documentation. Any increase in the profit figure (over and above the profit figure stipulated above) accrues 100% to you, the developer.IF DURING THE BUILD OUT OF OUR CURRENT PROJECT, I COME ACROSS ANOTHER SITE, WILL YOU COSIDER FUNDING IT?
We are looking to build long-term relationships. Therefore we would certainly consider the second site, providing the current one is going according to plan and we are satisfied that you are not over-stretching yourself.
WHO IS CALMEZ?
CALMEZ is a company under the CAL Homes Group umbrella with a “hands-on” management team of experienced property developers and financiers working in association with selected prime UK banks to provide small developers with up to 100% development funding.
WHAT PRIME BANKS DO CALMEZ USE?
CALMEZ have arranged development loan funding on behalf of their developer clients with Clydesdale Bank, Lloyds TSB Bank and Royal Bank of ScotlandWOULD YOU OBJECT TO US USING OUR OWN PRIME LENDER?
We would prefer to work with our selected prime bankers to synchronize our documentation and procedures, whereby we are able to provide very quick loan offers. We have also agreed our specific role in relation to monthly draw-downs and have agreed amendments to the standard Deed of Priority.
WHAT INITIAL COSTS ARE INVOLVED TO ESTABLISH THIS COMBINED LOAN?
The costs are in line with generally accepted levels:
| Arrangement fee: |
1% |
| Legal fees: |
0.5% (approximate) |
| Valuation: |
0.1% (approximate) |
| Draw-down fees: |
£500 (monthly) |
| Brokers fee: |
0.3% |
Of the above fees, only 0.8% will be payable-up front and the balance can be included in the loan application and paid from the first draw-down. -
WHAT HAPPENS IF THERE ARE COST OVERRUNS?
To protect both the Prime lender and the Mezzanine fund provider the developer will be required to provide a personal guarantee to cover any cost overruns over and above the developers warranted costs.
WHAT DOES CALMEZ OFFER THAT IS DIFFERENT TO OTHER MEZZANINE FUNDERS?
CALMEZ in partnership with selected prime UK bank lenders offers a unique “one-stop-shop” offering up to 100% of the funding, This is supplied by the two fund providers acting in unison and using much of the same documentation.