DEVELOPMENT LOANS

Development Loans

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 project.

As a developer, you need finance.  The big question is what is the project and at what stage is the development.  We need to understand the type of loan required, is it a ground up development, part built, conversion, renovation or a new build. 

Is the development residential, purely commercial 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 can be challenging.

How much can you borrow?

Lenders use various criteria when assessing development loans, they look at the project and how it stacks up, experience, the gross development value (GDV), build cost and demand in the area for that type of development.  Typically, the 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 in the background, 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, the exit from this would normally be agreed during the assessment/application stage.

Experience

The expectation from lenders is that the development team has credibility and experience with the type of project they are considering.  However, if you own or are the main investor, you can still get funding if you have the experience.

Specialist Finance

MOST BUY TO LET, COMMERCIAL MORTGAGES AND COMMERCIAL FINANCE ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY. 

PLEASE MAKE BORROWING DECISIONS CAREFULLY, YOUR HOME OR ANY OTHER PROPERTY OR ASSET OFFERED AS SECURITY FOR A LOAN OR MORTGAGE MAY BE AT RISK OF REPOSSESSION IF YOU CANNOT KEEP UP THE AGREED PAYMENTS