Financing For Property Development
Proactive financing for property development
When it comes to financing for property development, it’s vital to work with an experienced advise who can not only get you the best deal, but help you every step of the way.
Do you have a question about financing a property development?
If you have a question about development finance that is not covered here, please contact us.
Is it possible to get 100% financing for property development?
Financing for property development can be structured in two parts (assuming you don’t already own the land):
- The land acquistion
- The build costs.
Technically 100% development finance to purchase the land and development costs is possible, but highly unlikely to ever happen, unless you have a friendly funder! More likely the way it can happen is if you have other assets to offer as security, which I will explian shortly.
More often than not, a lender wil require some ‘skin in the game’ (deposit) particularly for the land purchase. This can vary from lender to lender but a good guide is a borrowing amount of upto 70% of the value of the land. In other words, you will need at least 30% deposit, but don’t be surprised if its more like 40-50%.
Once the land is aquired, some lenders may then lend upto 100% of the buid costs, but this really does come down to the specific deal and lender.
If you have other assets and security you can offer as part of a deal, you may be able to secure 100% of the finance you require. Although a lender may only lend 60-70% on the particular asset you are intereested in, you might have enough equity in other assests to raise the remaining amount. A lender will either have a legal charge across multiple assets, or a first and second charge if required. The way it is strcutured will very much be dependent on your individual circumstaces and the specifics of the deal.
But don’t forget,lending rules and criteria always change.
What is development finance used for:
Development finance is not only for professional property developers, but also for people looking to develop a property, build their own home, or convert their own space.
Essentailly it doesn’t always have to be for commercial gain, but your personal benefit too.
There are lots of reasons and uses for development finance. Here are just a few:
- Self build projects.
- Commercial developments.
- Refurbishment projects.
- Loft conversions.
- Barn conversions.
Who are the best development finance lenders?
There are lots of development finance lenders in the market. Some have been around for a long time but there are always new kids on the block arriving too.
The reality is that some lenders are better than others, more transparent than others, more efficient than others, harder to work with than others etc. And although a lender might be the flavour of the month now (ie they have really good lending criteria and a strong apetite to lend), this does not mean it will last!
We have seen numerous times good lenders turn into bad lenders. This might be becuase they started off small and agile, but then grew into an admiinstrative headache for everyone. A lender might have had amazing rules, but then decided they were taking on too much risk and tightened everything up. There are all sorts of reasons, but the reality is that working with independent mortgage brokers who have thier finger on the pulse of the maret and who are dealing with the lenders on a regualr basis, we know who the best bridging lenders are at any point in time.
The answer answer is that things can and do change!
Our experts are here to help you, every step of the way
Our expert knowledge has been built from experiences in the independent, corporate and property world. From arranging financing for property development, complex property portfolios to first-time buyers. If there’s a way to do it, we’ll find it.
- We assess
- You instruct us
- We research
- We find the best deal for you
Agreement In Principle
- You agree to the deal
- We submit the first stage of your application
- You get an agreement in principle
- We submit the second stage of your application
- We present your application in the best possible manner
- They assess your situation
- We support you throughout the process
- They assess your property
- You receive your mortgage offer
- Technically our job is done but we also like to help
- We liaise with solicitors and estate agents
- We keep you updated
- You achieve your goals