Development finance is a specialist borrowing product that is designed to cover the cost of completing a property development project. This could include any one of a large number of tasks, such as the construction of one or more new build properties, a large-scale property conversion, major renovation works or a part-build. At Donkey Finance, we can provide funding suitable for residential and commercial projects or even mixed-use developments. Applications for this type of finance are processed and approved on a case-by-case basis, with each individual project assessed on its own merits.
Unlike traditional mortgaging products, development loans are released incrementally, with additional funds being made available as the various stages of a project are completed. As the development progresses, the value of the project increases and the additional equity is used as security against which any new funds are lent. In most cases, you will need to own the land you are building on and planning permission will also be required in order for a lender to feel confident enough to release the funds. A proven track record is also a good sign as far as the lending facility is concerned and it always helps if you can provide detailed proof of any previous development projects you have completed successfully in the past.
The funds required to finance real estate development can be accessed via multiple channels. In most cases, development finance is available for between 75% and 90% of the total value of the project. In all instances, sufficient security must be provided – typically in the form of existing property or combined assets. Specialist development finance provides an accessible, flexible and affordable alternative to more conventional loans and funding channels.
Bridging loans can also be used to finance real estate development if the applicant has a confirmed exit strategy in place. The proviso with bridging loans is the capacity to repay the loan in full within a matter of weeks or months. If a longer repayment period is required, development finance or alternative secured loan options may be preferable.
Eligibility for development finance is determined in accordance with the size and nature of the project, along with the financial position of the applicant. If sufficient security can be provided, credit checks and proof of income may not be required. If considering development finance for a real estate project, be sure to compare the deals from specialist lenders across the UK before making your final decision.
A property development project can be financed by a variety of ways, in accordance with its size, nature and urgency. In the case of larger and longer-term term property development projects, specialist development finance solutions should be considered. Development finance loans are offered in the form of secured loans, with flexible repayment periods and competitive overall borrowing costs.
Shorter-term requirements can be covered with a bridging loan, which can often be accessed within a matter of days. Urgent repairs, alterations, business modifications and general business expenses represent ideal applications for commercial bridging loans. Traditional business loans and mortgage products may also be considered, but typically take considerably longer to organise and access.
Peer-to-peer lending, crowd-funding and other options exist for financing a development project, though again can be time-consuming to organise.
Accessing the best property development finance deals on the market means to set your sights beyond the High Street. UK Property Finance offers a whole-of-market comparison service, working with independent specialist lenders across the country. Contact a member of our customer support team today to discuss your requirements in more detail.
Financing a property development business is a process similar to that of funding any other business. When getting the business itself off the ground in the first place, there are various personal loans, business loans, secured loans, government grants and peer-to-peer funding options to consider. You could also extend the value of your current mortgage, or borrow the funds you need against the value of your property.
Once up and running, a property development business can access development finance to fund immediate and on-going projects alike. Across the board, development finance loans are offered in the form of secured loans, using the borrower’s property as collateral. Development finance can be borrowed to cover around 75% to 90% of the total cost of the project, to be repaid over anything from 1 to 30 years. Bridging loans can be useful for covering more immediate and urgent expenses, to be repaid in one lump sum a few weeks or months down the line.
Your ideal funding option will be determined by your current position, your objectives and your budget. As an independent broker, UK Property Finance can help you locate and access the ideal funding solution for your property development business.
When you apply for property development finance through us, you can rest assured that you are working with the industry's leading experts. As well being able to provide a popular range of finance products from the entire lending market, we offer the lowest rates available with no upfront application fees – and we can even fund up to 100% of the building costs of most projects, as long as you have sufficient collateral. We can also help with land purchasing costs whilst providing funding options starting from £20,000 with no upper limit on borrowing – as long as the project is commercially viable and the applicant already owns the development land without any restrictions.