Property Development Loans: Tailored Finance for Your Real Estate Project

What are Property Development loans?

Property development loans come in all sizes, and developers can either be very experienced or have little experience; for some, it may be their first property development project. Development loans are specifically designed to help with the costly expenses that come with a real estate development project, whether it be from the ground up, part-built, a conversion, renovation, or a new build.

As a developer, you need development finance. The big question is, what is the project, and at what stage is the development? We need to understand the type of development finance works required: Is it a bridging finance loan, or is it for a fully completed property? Is the project a residential property, purely commercial property, or mixed-use? Of course, this is not the only information required, but at this stage, the picture is beginning to form, and we are starting to get an idea of the sort of product that might be required.

Land without planning permission is not impossible to fund, but it can be challenging as specific lending criteria are involved with property development loans, and a specific process needs to be followed. If you’re wondering what options are available for you, we would be more than happy to advise. Get in contact with us today to find out more about property development loans, interest rates, and arrangement fees.

How much can you borrow?

Lenders use various criteria when assessing the development loan amount. They look at the project and how it stacks up, the developer’s experience and track record, the gross development value (GDV), construction costs, and demand in the area for that type of work. Typically, lending can be anywhere between 60% and 75% of the GDV. In some cases, lenders may consider up to 100% of the build cost. If there are other assets with good equity, some lenders may consider funding 100% of the project, although this is rare. Development loans are normally no longer than 24 months depending on the size and nature of the project itself, with funds being released in stages throughout the project. The exit fees from this would normally be agreed during the assessment/application stage.