Everything You Need to Know About Property Development Finance

If you're looking to finance a development project, here's all the information you need to get your project off the ground

Property Development Finance

What is development finance?

Property development finance is specifically curated to be a short-term loan for the sole purpose of funding residential property developments. As development finance loans are short term funding options, they are usually repaid within 6- 18 months. This is because they are designed specifically to assist with the large upfront costs that are associated with a residential development venture.

This could range from major refurbishments through to entire construction projects, including single properties all the way up to multiple plots that are released over phases. The amount of funds that you are able to borrow is commonly based on the estimated value of the property or site once the project is finished, which you pay back incrementally.

How does development finance work?

Generally speaking, when it comes to property development, the loan itself is split into two parts. In most cases, the first round of funding is for the purpose of purchasing the site where the development will be taking place. This doesn’t necessarily have to be a plot of land. Although this is an option if you are planning on building a number of properties, the loan could also be used to buy an existing property with the intention of carrying out a refurbishment.

The costs associated with the building work and materials, are covered in the second stage of the loan. Unlike the first stage of funding which tends to be released in one lump sum at the beginning of the project, this part is usually released in stages as work continues to be completed.

In some cases, the sign off of milestones within the project that allow the release of funds is reliant on sign off from an independent monitoring surveyor, also known as an IMS. Something to note is that although the IMS is acting on behalf of the lender, it is the borrower that is liable for their costs. The involvement of an IMS is dependent on the experience of the property developer in question and the type of project that is being undertaken. Should your lender deem it necessary to use an IMS, they will essentially be responsible for reporting back on the progress of the project, ensuring that it is on time and within budget, raising any red flags to the lender

How Much Finance Can I Apply For?

The amount of finance that you are able to apply for is dependent on three core factors.

These figures will be determined by a professional valuation report to ensure that the figures and estimates are accurate and reflective of the potential value of any development project borrowed against.

It is worth noting that each lender will have their own varying criteria that will decide how much can be borrowed, as well as the repayment terms.

  • The current value of the site, land or property, depending on the type of project
  • The building costs to complete the project
  • The estimated final value of the property upon completion

How Do I Apply For Development Finance?

Applying for development finance couldn’t be easier. Once you decide to get in touch either by calling us on 0121 309 0444 , emailing enquiries@f4b.biz or filling out our enquiry form, 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. 

Finance 4 Business has the market covered. Our experienced commercial team will focus on your exact needs and requirements in order to find the perfect lender from our panel. We utilise High Street Banks, Challenger Banks and Specialist Lenders, enabling us to offer a range of products to meet your borrowing requirements. We have built long standing relationships, which allows us to negotiate packages that are tailored perfectly to your project and your circumstances, rather than offering a one size fits all solution that may not be completely suitable. 

Once we have chosen the right lender for you, we will help you put together a proposal to articulate the strength of the project. We have relationships with all of our development finance lenders, therefore we know exactly what they are looking for, what apprehensions they may have and how you can overcome them, to help everything move on as smoothly as possible. 

We will keep you completely up to date with your application throughout the whole process, working as efficiently as we can to secure the funds at the earliest opportunity.

Can anyone apply for development finance?

Whether you are a first-time developer or a professional developer with years of experience, you can apply for finance to fund your development project.

We have helped an abundance of new developers successfully complete their first project, seamlessly, guiding them through the entire process ensuring that they don’t fall victim to common pitfalls. We understand that each new project is unique, so we listen to you and work with you to ensure that we find the right development finance solution.

We appreciate the importance of never underestimating the complexity of a project, allowing us to source the right development finance solutions from our extensive panel of development finance lenders. Our team and finance consultants at Finance 4 Business ensure each and every client’s requirements are met to deliver a successful project, each and every time. This experience makes us an indispensable addition to any professional developers team.

Development Finance Case Studies

At Finance 4 Business, we pride ourselves on our wealth of talented finance experts, who work together to help deliver results for our clients. It is this unparalleled experience that has helped us build a reputation that we are proud of. Read more about exactly what we have done for our clients in our development finance case study archive.