Indicative terms

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By Jonathan Rubins, Director & Chief Commercial Officer at Alternative Bridging Corporation

Indicative terms – What are they?

Indicative terms are a critical aspect of the lending process in the world of bridging loans and development finance. They serve as an essential guidepost for borrowers, helping them understand the proposed loan structure, interest rates and repayment terms before committing to a financial arrangement. In this comprehensive guide, we will explore the significance of indicative terms and how they apply to Alternative Bridging’s range of bridging loans and development finance solutions. 

 

Understanding Indicative Terms 

Often referred to as “indicative offers” or “terms sheets,” they are preliminary loan proposals provided by lenders to potential borrowers. These terms outline the fundamental aspects of the proposed loan, allowing borrowers to evaluate the feasibility and attractiveness of the financing option. 

 

Key components typically included in indicative terms are: 

Loan Amount 

The proposed loan amount is specified, giving borrowers a clear idea of how much they can potentially access.  

Interest rates 

Indicative terms outline the applicable interest rates, whether fixed or variable. Understanding these rates helps borrowers estimate the cost of financing. 

Loan structure 

Borrowers are informed about the structure of the loan, including whether it’s a bridging loan or development finance, the term of the loan and any special conditions. 

Repayment terms 

The terms specify how and when the loan should be repaid, including details about interest payments. 

Fees and charges 

Indicative terms may highlight any upfront fees, arrangement fees or other charges associated with the loan. 

Security requirements 

Borrowers are informed about security required to secure the loan. 

Loan-to-Value (LTV) Ratio  

The maximum LTV ratio, which represents the percentage of the property’s value that can be borrowed, is always stated. 

 

Indicative terms are always provided at the early stages of the lending process, giving borrowers an opportunity to assess the suitability of the proposed financing solution. It’s important to note that these terms are not binding offers but rather a basis for further discussions and negotiations. 

 

Significance of indicative terms in bridging loans 

Clarity and transparency 

They promote transparency in the lending process. They provide borrowers with a clear understanding of the loan’s terms, helping them make informed decisions. 

Comparison of offers 

For borrowers considering multiple financing options they enable easy comparisons. By reviewing different lenders’ proposals, borrowers can select the most favourable terms for their specific needs. 

Feasibility assessment 

They help borrowers assess the feasibility of their projects. For example, in property development, understanding the proposed loan structure and repayment terms is essential for project planning. 

Negotiation point 

They can serve as a starting point for negotiations between borrowers and lenders. If certain terms are not aligned with the borrower’s expectations, negotiations can be initiated to reach mutually agreeable terms. 

 

Alternative Bridging Corporation’s indicative terms 

At Alternative Bridging Corporation, we understand the importance of clarity, transparency, and flexibility in our lending process. We offer a range of bridging loans and development finance solutions, and our indicative terms are designed to empower borrowers with the information they need to make informed choices. 

Bridging loans 

Our property bridging loans cater to a variety of needs, including residential and commercial property acquisitions, property renovation, and investment. When you receive indicative terms from Alternative Bridging, you can expect: 

Clear loan structure 

We outline the structure of the bridging loan, including the loan term and any unique features. 

Competitive interest rates 

Our terms provide details about the interest rates applicable to your loan, allowing you to assess the cost of financing. 

Repayment terms 

You’ll find information about the repayment schedule, ensuring you understand when and how the loan should be repaid. 

Loan amount 

Indicative terms specify the proposed loan amount based on your requirements. 

Security requirements 

We explain the collateral or security required to secure the loan, giving you a clear understanding of your obligations. 

 

Development Finance 

For property developers seeking development finance solutions, our indicative terms offer: 

Loan structure 

Clear explanations of the loan structure, whether it’s a development finance facility or a specific project-based arrangement.

Interest rates 

Details about the interest rates associated with the financing, including whether they are fixed or variable.

Loan-to-Value (LTV) ratio 

Terms include the maximum LTV ratio applicable to your development project.

Repayment terms 

Clear information on how and when the loan should be repaid, including any interest payments during the development phase. 

Fees and charges 

They outline any upfront fees or charges associated with the development finance facility. 

 

When to request indicative terms

They should be requested early in the lending process. They provide borrowers with essential information to assess the suitability of a loan or financing arrangement for their specific needs. Whether you’re planning to purchase a property, renovate an existing one, or undertake a property development project, obtaining indicative terms is a valuable first step.  Find out what other paperwork you might need.

Do I need indicative terms? 

While they are not legally binding offers, they are highly recommended for borrowers in the following scenarios: 

Multiple financing options 

If you’re considering multiple lenders or financing options,  they can help you compare proposals and select the best fit. 

Project planning 

For property development projects, they are essential for project planning and budgeting. 

Financial clarity 

Terms provide clarity and transparency, helping you fully understand the terms and conditions of the proposed loan. 

Negotiations 

If certain terms don’t align with your expectations, you can use them as a basis for negotiations with the lender. 

 

Speaking to the property finance experts  

Navigating the world of bridging loans and development finance can be complex, but you don’t have to do it alone. Alternative Bridging is here to assist you every step of the way. Our team is ready to provide you with indicative terms tailored to your specific financing needs. With over 30 years of experience in the industry, we prioritise transparency, flexibility and customer satisfaction. 

When you’re ready to explore your financing options or seek clarity on indicative terms, don’t hesitate to reach out to us.  

 

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