Development Finance Types

Donkey Finance can provide development finance for many different types of project including land and property developments. In general, these are broken down into the following categories:

Residential property development

Usually involving the development of flats or houses on brown or greenfield sites, residential property development sometimes entails the conversion of a large house into HMOs - flats or bedsit apartments, or vice versa. Developments of this nature are usually carried out as a commercial venture and not with the intention of the owner occupying the dwelling(s) once completed. If you are in the situation where you are seeking to renovate or extend a property whilst finding yourself unable to obtain suitable financing from a bank or building society, a residential property development loan is often the ideal solution. As the funds are secured against the market value of the property, your ability to afford regular repayments, on an ongoing monthly basis, will not be taken into account.

Self-build finance

If you are looking to build a new home from scratch, which you intend to live in yourself once completed, you will typically require self-build development finance. This type of product is FCA regulated and is arranged in much the same way as a convention mortgage. Therefore, you will need to show that you are capable of affording the monthly repayments when applying for this type of finance as a funding method.

Commercial and semi-commercial developments

This type of finance is suitable for funding the development of commercial properties, including offices, industrial units, retail outlets and semi-commercial projects such as shops with separate living accommodation included as part of the premises. Commercial and semi-commercial development finance can be used for a variety of reasons, such as the purchase of building materials or stock, and as a means of solving immediate cash-flow issues including tax bills. When you apply for commercial finance, the loan is secured against the bricks and mortar value of the property, which may also include land assets. "Good Will" is not included as part of the valuation as the lender is only interested in the worth of the property itself and not the value of the actual business.

Property renovation and refurbishment

These types of development projects encompass complete renovation and refurbishment work, which often includes the conversion of derelict buildings, such as the transformation of barns or disused industrial buildings into habitable dwellings. Basically, this could be any property with four walls that may have missing doors and windows, or is lacking a staircase, solid flooring or a roof. This also extends to utilities such as running water, electricity or gas supply. If you intend to occupy the building once converted, you will need to apply for an FCA regulated development loan. However, if you are planning to sell the property once the renovation work is completed, FCA regulation will not be required.

FCA Regulated Finance

As an FCA regulated broker, Donkey Finance can secure finance for any type of development project. Whether you are working on a new build project, or you are planning to renovate or refurbish an existing property, either residential or commercial, we will work with you throughout the entire duration of the project until the day of completion. When you apply for development funds using our services, we will carry out an initial visit and perform an on-site inspection, ensure that the lender documentation is suitably prepared and, once we have obtained approval for funding, we will offer continued help and support to ensure everything runs along smoothly and that the agreed funds are released on time, as and when required. We can also assist with a realistic exit strategy by securing a suitable refinancing package on your behalf so that you can settle the loan balance in full once the project has been finalized.

Development Funding Criteria

When we consider each application for development finance, we always take the following considerations into account:

Funding requirements - you will need to ensure that there are sufficient funds in order to see the project through from beginning to end. This includes realistic contingency funding in order to cover any costs that are not part of the initial equation.
Timing the release of funds - if you want your project to be a stress free and profitable venture then it is essential that the drawdown stages are timed and planned appropriately so that there are no cash flow problems interfering with the progress of your development.
Accurate Costing - it is essential that everything is budgeted for and costed out effectively whilst allowing for any discrepancies. Although you might be looking to save on the initial costs, it is more important that the funding package is compatible with your needs. This will help avoid any unnecessary complication midway through the project.
Project Viability - our investors will obviously expect you to be able to show that the development is capable of generating sufficient returns with a good level of profitability.