How do you finance property development?
- Development Finance
If you want to develop or convert a property, chances are, you’re going to need development finance. Development finance is a broad term that covers a range of financial solutions. This can be from a ground-up development, extension, conversion or any project that would need planning permission. It is constantly evolving with various specialist lenders continuously entering the market.
The world of property development finance can be complex and confusing. Luckily, as a specialist financial brokerage, we’re here to help.
What can property development finance offer?
There are many different types of development finance lenders and facilities available, each targeted at specific types of development projects.
In general, property development finance is specifically curated to be a short-term funding solution that is usually paid back within 12 to 24 months. This allows developers sufficient time to get the construction element of the project finished and arrange disposal via sale or refinance to pay off any development loans in place.
Smaller development such as an aesthetic renovation or ‘light to medium’ refurbishment would most likely be arranged via a bridging loan. This would involve fewer funds than a redevelopment where heavy structural work is required. For investors, the importance of property development is crucial, as it can drastically increase the value of a property.
Some borrowers may consider longer finance solutions such as bridge-to-let where they would take a bridging loan, renovate a property and rather than sell it, rent it out and flip the facility into a buy-to let-mortgage.
How much finance can I apply for?
The amount of finance that you are able to apply for is dependent on the type of loan you would like to use to finance your property development. In general, however, lenders would consider the current value of the site, land or property, the building costs to complete the project and the estimated final value of the property upon completion.
On a development project, a lender will always look to fund 100% of the build/construction costs and any surplus within the facility can go towards either purchase of recuperating costs to date, if the site is already owned.
Each lender will have their own criteria that will decide how much can be borrowed, as well as the repayment terms and is always agreed on a case by case basis.
Who can apply for property development finance?
Whether you are a first-time developer or a professional developer with an entire portfolio, you can apply for the funds needed to finance your property development.
At Finance 4 Business, our experienced property development finance team have helped developers across the country gain access to the finance they need, from first-time developers to experienced investors. We understand that each project is unique, and so we ensure that every client’s requirements are met each and every time.
How can you apply for development finance?
Through a specialist financial broker such as Finance 4 Business, you can rest assured knowing you are getting the financial solutions you need.
One of our development finance specialists will have an initial discussion with you to scope out the project and get a better idea of where you are at and if you have any unique requirements. This will give our consultants a picture of how much finance may be required and allow us to start putting the wheels in motion to find the best options to suit your requirements.
At Finance 4 Business, we have relationships with all of our development finance lenders, and therefore understand exactly what they are looking for, what apprehensions they may have and how you can overcome them.
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