How to Finance Property Development
Our Development Finance Service Provides:
- Development finance from £100,000
- Finance for: New build, conversion, minor & major refurbishment
- Residential developments of all types
- Up to 65% GDV finance available
- Up to 100% development cost finance available
- 100% joint venture finance available for experienced developers
Call our property development finance team on 0117 313 6058
Finding property development finance
Finding the right way to fund property developments is one of the main challenges for anyone looking to build, convert or renovate property, whether for private use or as a commercial venture. Failing to get the right financing in place is one of the major stumbling blocks which can seriously derail development projects.
Many developers use a form of short term finance called a bridging loan to bankroll their property projects. This type of loan can normally be accessed quickly, with the first funds often being released to the borrower as quickly as within a few days.
This makes bridging finance the ideal choice for property developers who need to move forward fast, especially if buying at auction or if previous funding has fallen through.
How property development finance works
Bridging finance for property development is normally offered over 12-18 months. Longer loan terms may be considered by some lenders, depending on the circumstances which includes the level of experience of the developer.
Funds will normally be released in instalments as the project progresses. The points at which each instalment will be handed over will be agreed in advance to coincide with significant milestones in the build, such as when the site it purchased, when the building is weatherproof and when the first fix plumbing and electrics are completed.
How to get finance for property developments
When applying for finance for a property development, most lenders will want to see the following:
- Your income, expenditures, assets and liabilities
- Bank statements
- A project valuation from a professional of their choosing
- A detailed project cost breakdown
- Development timeline
- Planning permission documents
- Building regulations consent
- Your National House Building Council (NHBC) insurance details or an equivalent
- A plan for repaying the loan e.g. by taking out a mortgage or by selling the property or properties
The cost of finance for property developments
Various elements of your development loan deal will affect exactly how much it ends up costing you. These include how much you borrow, how long the loan term is and what percentage of the Gross Development Value (GDV) you borrow. GDV is how much the project will be worth once completed.
The three main costs you will pay are the arrangement fee, monthly repayments and an exit fee (although not all lenders charge an exit fee). These must all be carefully considered when working out how much the loan will cost as a loan with no exit fee can sometimes be much cheaper even if it has a higher interest rate.
Compare finance for property development
Getting the best possible deal on your property finance can make a big difference to the viability of the project, whether as a commercial investment or a private development. The less you end up paying for your development finance, the more you have left to put into the project or to take out as profit when the development is sold.
Fair Mortgages’ team of specialist development finance brokers can make it fast and straightforward to access the money you need to move forward with your development. We work with all the leading lenders, including many not available direct to consumers, so can offer the best possible choice on development loans.
To find out more, call Fair Mortgages today on 0117 313 6058 or use our contact form for a quick response.