Our loan terms are calculated transparently using our Predict+ model. Below are the key formulas used in our calculator to determine loan terms, ensuring clarity and fairness:
Our fee structure is designed to be transparent and straightforward, with no hidden costs or complicated calculations. The following table outlines all potential fees you may encounter during your loan term, with most fees being fixed percentages rather than variable amounts.
| Fee Type | Amount |
|---|---|
| Origination Fee | 1% |
| Drawdown Fee | £500 |
| Repayment Fee | 0.5% |
| Interest Rate | 1% |
| Legal Fee | At cost |
| Valuation Fee | At cost |
| Monitoring Fee | At cost |
Note that while most fees are percentage-based, certain administrative fees like legal and valuation are charged at cost to ensure fairness and accurate reflection of third-party expenses.
- P = Purchase price
- B = Build costs
- E = End value
- T = Term
- D = Number of drawdowns
- Lpurchase = Purchase loan
- Lnet = Net loan
- Itotal = Total interest
- Fexit = Exit fee
- Fdrawdown = Drawdown fees
- Forigination = Origination fee
- Ftotal = Total finance costs
Below we present our core loan calculations using the variables defined above. Each formula is accompanied by a practical example using a sample scenario (Purchase: £250,000, Build: £100,000, End Value: £400,000) to demonstrate how these components work together to determine your loan terms and potential returns.
\[ \text{Purchase Loan} = \min\left(P \cdot \text{LTV}_{\text{max}}, \left(E \cdot 0.70 - B\right)\right) \] Example: For P = £250,000, LTV_max = 70%, and E = £400,000, Purchase Loan = min(175,000, 180,000) = £175,000 \[ \text{Build Loan} = B = £100,000 \] Build loan covers 100% of total build costs: £100,000 \[ \text{Total Interest} = I_{\text{purchase}} + I_{\text{build}} \] \[ I_{\text{purchase}} = L_{\text{purchase}} \cdot 0.0099 \cdot T, \quad I_{\text{build}} = \sum_{i=1}^{D} \left(\frac{B}{D} \cdot 0.0099 \cdot \frac{T - (i+1)}{12}\right) \] Total interest includes purchase loan interest (full term) and build loan interest (rolled up over drawdowns, with dynamic monthly allocation). \[ \text{Drawdowns} = \begin{cases} 4 & \text{if } B \leq 150,000 \\ 5 & \text{if } 150,000 < B \leq 200,000 \\ 6 & \text{if } B > 200,000 \end{cases} \] Number of drawdowns depends on build costs, starting at 4 for smaller projects. \[ \text{Origination Fee} = \frac{(L_{\text{purchase}} + B + I_{\text{total}} + F_{\text{exit}} + F_{\text{drawdown}}) \cdot 0.01}{1 - 0.01} \] Origination fee is 1% of the gross loan without origination fee, adjusted for inclusion. \[ \text{Net Loan} = L_{\text{purchase}} + B \] Net loan is the sum of purchase and build loans. \[ \text{Total Finance Costs} = F_{\text{Origination}} + I_{\text{total}} + F_{\text{exit}} + F_{\text{drawdown}} \] Total finance costs include origination fee, interest, exit fee (0.5% of net loan), and drawdown fees (£500 per drawdown). \[ \text{Profit} = E - (P + B + F_{\text{total}}) \] Profit is end value minus purchase price, build costs, and total finance costs. \[ \text{ROI} = \left(\frac{\text{Profit}}{P + B - L_{\text{net}}}\right) \cdot 100 \] Return on investment is profit divided by equity required (purchase price plus build costs minus net loan).
Loan Term & Extensions
We have no minimum term, meaning the borrower is free to redeem at any point, being charged interest until the end of the same month.
Our terms are modelled based on a 9 or 12 month term based on the scope of the work undertaken, however should the borrower need more time, we will extend the loan for a 1% fee, with the interest rate remaining the same.
Predict+ Data Modeling
Our proprietary Predict+ model leverages advanced analytics to estimate key project metrics, ensuring accurate and reliable predictions for your development project.
- Purchase Price: Based on location, property features, and current market data analysis
- Build Costs: Calculated using regional benchmarks, project specifications, and historical data
- End Value: Derived from comparable properties, market trends, and area-specific factors
- Estimated Rent: Comprehensive room-by-room analysis for HMO properties