Here at BusinessComparison we understand the importance of maximising your margins when developing property. There are a variety of property development finance options available, however the interest rates and finance costs can vary significantly between lenders.
We have partnered with a variety of mainstream and alternative lenders, so you can easily compare finance rates and fees to find the most competitive deals.
If you are looking to finance a development project, there are a variety of finance options available for complete builds, renovations and refurbishments of both commercial and residential properties. Development finance enables businesses to raise the capital required to cover build costs when a financially viable project is available, rather than missing opportunities due to a lack of cash flow or savings.
The majority of projects are structured to use the developers contribution first, so you will need to have a percentage of the total cash required available. Once your cash is depleted, the lenders contribution can then be drawn down at various stages to cover build costs.
Our panel of specialist lenders can provide loans to cover everything from new build apartment blocks to small scale residential refurbishments. Development finance options are available to cover building costs of properties of every scale, allowing projects to be completed quickly and efficiently. At the end of the project, the loan is usually repaid through the sale of the property or alternatively the loan can be refinanced on to a longer term.
The lowest interest rates and fees will be available to those with experience in property development, as they will represent a lower risk to the lender. The repayment terms of the development finance will be based on the time frame of the development, usually within 12 or 24 months. Although, some lenders will offer terms of 48 months for large scale projects. If you are looking for development finance for a term longer than the usual 24 months, there will be less lenders available, so you could pay higher interest rates and higher fees.
Development finance offers shorter terms than a traditional mortgage, where repayments can take up to 30 years. The short length of a development loan also means you won't be tied down for longer than required.
Whether you are looking for a loan to provide the cash required to undertake a new property development or you need finance to cover the remainder of refurbishment costs, there will be a finance solution to suit your project.
The exact loan amount available to you will depend on factors such as the gross development value (GDV). This is the value of the property at the end of the development work. The finance amount available will be the equivalent to a percentage of the GDV, which is usually between 60-75%.
The loan can be used to cover everything from materials to contractors, so it is not uncommon for loan amounts to vary greatly. In general, the smallest loan amounts will start around £30,000, with £30,000,000 being the largest development loan available. However, lenders will only offer finance for a maximum of 75% of the gross development value, so you will need 25% of the cash available.
The loan amounts available will vary between lenders, as each will have a preferred investment level, as they will specialise in different types of development projects. Our panel includes more than 30 lenders, so we will be able to match you to the ideal lender for your property development finance requirements.
By matching you to the lender most suited to your project, you could benefit from an interest rate as low as 4.5%. However, the interest rates and fees offered vary across the market.
A small loan amount of less than £500,000 will usually pay a higher interest rate, while a loan amount of more than £500,000 to experienced developers will benefit from the lowest interest rates. Whatever your loan amount requirements and property development plans, we will do our best to match you to the ideal development finance provider.
The lenders will also charge a range of fees, which vary depending on the type of project you are undertaking. For example, the majority of lenders charge arrangement fees for setting up the loan. While many lenders will also charge an exit fee, based on the amount borrowed or the value of the development.
The exit fee charged can vary significantly, depending on whether it is based on the amount borrowed or the value of the development. Before you accept an offer of development finance, it is important you are aware of the arrangement fee, exit fee and also potential valuation fees at the end of the project.
Here at BusinessComparison we have partnered with a panel of lenders which specialise in property development finance. Each of the lenders is authorised and regulated by the Financial Conduct Authority, so you have quick access to a range of trustworthy, transparent lenders.
As a broker we can help you compare finance options in one single place, saving you time and money.
Before applying for finance it is advisable to secure full planning consent, as this will improve your chances of approval. The next step is to complete our simple online form, with details of the loan amount you are looking for, the total cost of the development and the gross development value.
We will also need to know your personal details and business information, so that the lender will be able to contact you.
We will analyse the information you provide to match you a lender which specialises in the type of development you are completing, so you are more likely to be approved.
The lender will need a variety of documents to process your application, including details of your planning permission, comparable sales and information about the market you are targeting. These documents will help the lender determine whether you are eligible for a loan.
Based on the details you provide we will match you to the ideal lender for your project. The chance of approval will depend on factors such as the type of development project, its size and the experience of those involved.
They will be considering the gross development value and the chance of the property selling, when they decide on the loan amount available to you.
Many lenders will analyse your application and offer a loan decision within just 48 hours. If you are approved for your loan and are happy with the interest rate, arrangement fees, exit fee and terms offered, the loan can often be released quickly.
Our services are completely free of charge to you, as we are paid by the lender if you decide to proceed with their offer of finance. When you use our comparison services to find a loan, you will be under no-obligation to proceed with the loan.
To find out more about development finance, please call us today.