Property development finance

Property development finance

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Development property finance compared

If you are a property investor, developer or landlord, you may be looking for ways to fund your next project. Whether you are a new property developer or your property development company has been established for many years, there are a variety of property finance options available.

Here at BusinessComparison, we have built partnerships with development finance providers within both the traditional and alternative lending market, so you can access the funds you need.

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What is property development finance?

There are various forms of finance which are used by developers to renovate, refurbish, convert or even build properties of every size. They say the key to successful property development lies in finding the ideal location at the right time, however we believe it is equally important to be able to access the ideal finance quickly and easily.

Whether you are a first time developer or an investor with multiple properties in your portfolio, we can help you find competitive rates across a variety of finance options for developers. As a broker we have partnered with a panel of specialist lenders who are authorised and regulated by the Financial Conduct Authority, so you can save time and focus on your next project.

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Benefits of property development finance comparison

Up to 75% gross development value

Up to 75% gross development value

We can offer finance covering up to 75% of your development cost
Quick access to funds

Quick access to funds

Many development finance lenders can offer decisions within 48 hours
Finance from £25,000 to £30,000,000

Finance from £25,000 to £30,000,000

You can borrow large sums of money for your development, which will also depend on the amount of deposit you have available
Short term, flexible finance option

Short term, flexible finance option

The term of the finance is usually tied to the development timescale, meaning that you are not tied into repayments for long periods of time
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What is property development?

If you have purchased a property and are interested in developing, the most popular options are complete renovation and light refurbishment. The most straightforward projects are those involving light refurbishments, making them ideal for those who are new to developing. If you will not be altering the structure of the property and are simply carrying out aesthetic work, it is likely to be considered light refurbishment.

A renovation project extends beyond aesthetic changes and involves altering walls, electrics, plumbing and even extensions. The most extensive property development project is a ground-up development of a new build or extensive conversion of a very dilapidated building, following approval from the relevant authority. Before taking out any form of finance it is important to consider the gross development value, to ensure the project is financially viable. Depending on the project, you should consider how you will be able to repay the loan. For example, will the development be sold or refinanced?

How do you finance building development?

There are a variety of finance options available for property projects, these include:

Commercial mortgages

A commercial mortgage is one of the most common forms of property development finance, as it can be used to purchase most forms of commercial property. For example, shops, warehouses and offices can all be purchased using commercial mortgages.

A commercial mortgage is very similar to a residential mortgage and enables the large purchase cost to be spread across monthly payments for a set number of years. However, it is important to ensure you will be able to keep up repayments, as your property or home may be repossessed if you fail to repay the mortgage.

Landlords looking to expand their property portfolio may avail of commercial mortgages. It may also be possible to combine the mortgages for multiple properties into a single mortgage repayment. However, for landlords acquiring their first commercial rental property or those which operate on a part-time landlord basis, a buy-to-let mortgage may be more suitable.

Commercial mortgages are an ideal option for developers looking to renovate properties which they are not planning on selling immediately, such as investment rental properties.

Auction finance

If you are looking for a property at a reduced price or simply want a fast purchase process, an auction can be a great opportunity with many property types available.

There are a number of opportunities for property development UK wide, with some lenders specialising in auction finance.

If you place the highest bid, the auction house will normally require payment within 28 days. To ensure you are in a position to move quickly, It is advisable to get an agreement in principle before attending the auction.

Development finance

Once you have purchased a property, the next step is to find the cash required to complete any development work.

There are a range of development finance property options, designed to provide short-term loans to bridge any cash gaps. The finance you require will depend on the type of development project you are undertaking,

For example, a light refurbishment may require a bridging loan of 3-14 months. However, for a complete ground-up development, finance is available to cover both the land purchase and building costs.

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How do I become a property developer with no money?

If you do not have any cash reserves to finance your development, you may be able to secure 100% of the funds via specialist lenders. However, you will need to demonstrate a strong trading history and you may also need to supply additional security.

This security could be in the form of other properties. For example, if you are an experienced developer or landlord you may have enough equity within your portfolio to get finance for additional projects, without the need for liquid cash.

Our range of lenders are committed to helping you get your project off the ground, so even if you have been turned down in the past by a mainstream lender, we may be able to help. However, it is important to note that by providing security in the form of other properties or even your own home, if you fail to keep up repayments your development properties or home may be repossessed.

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How do I compare development finance options?

Here at BusinessComparison we specialise in helping businesses access the funds they need. Whether you are looking for a short term development finance or a mortgage to pay for a new build property, we can help.

Our panel includes more than 30 lenders, which are ideally positioned to provide a range of business finance products, while our team can help you find the best deal available. All lenders on our panel are authorised and regulated by the Financial Conduct Authority, so you have access to trustworthy lenders.

Our aim is to help you secure the most competitive property finance, with terms which suit your individual requirements. We can compare options from traditional high street banks and also alternative lenders, such as those specialising in peer to peer lending, so you get the best deal possible.

To find out more about the range of development finance options available to you, please contact our team.

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