Development Finance is a specialist form of loan, provided to developers and builders looking to improve and build property.
We can arrange development finance for all sorts of property projects from simple refurbishments to large new builds.
You can benefit from our 15 years of experience helping developers and builders get the money they need to buy and complete new projects.
As we aren’t tied to a small panel of lenders you can search the whole market by taking advantage of our quick, friendly and efficient service.
You will find we can get you the best rates and terms with the most suitable lenders.
You will have access to:
Loans From £100,000
Market Leading Rates
100% Of Build Costs
All of the UK
70% of GDV
No Monthly Payments
Commercial or Residential
No need for perfect credit
How Do Development Loans Work?
The theory is very straight forward.
Lenders, ranging from high street banks to small, independent, finance houses, provide loans in stages as work progresses on a project. It is normally a fairly short term option, with facilities available from 6 months to around 3 years. Of course, this depends on the complexity and scale of the project being undertaken.
As well as accommodating the cost of the building work, most lenders will also assist towards the purchase of the site or existing property.
Developer loans are available, for the most part, to those with experience, though there are lenders that will work with anyone, regardless of their track record.
The loan is repaid as the finished unit(s) are sold or refinanced onto longer-term options, such as buy to let mortgages.
What Can These Loans Be Used For?
Building finance can be used for either commercial, semi commercial or residential development.
Options are available to cater for New Build, Conversion and Refurbishment.
These are schemes that are from the ground up, using a bare site as the starting point. Lenders typically want to provide 100% of the build cost, in arrears.
The money is released in stages, as work progresses, subject to either Q.S. or valuation reports, confirming satisfactory progress.
Most providers are happy to consider conversion projects, which is normally the splitting up of a single larger unit into smaller ones.
In the UK, particularly in larger cities like London, this has been a very popular way for developers to operate.
Office space has been a favourite in the last 5 years with the relaxing of planning laws with permitted development.
The most basic of projects, these are sometimes nothing more than decoration and updating of old and tired fixtures and fittings, like kitchens and bathrooms. In some cases, a bridging loan might be sufficient for the developers' needs.
Of course, some refurbishment projects are on a grand scale, so it falls in the scope of full development finance. Again, the loan is released in tranches, subject to satisfactory progress by the developing company.
Availability Of Funds.
The market is currently full of money for the right projects.
Being able to raise it for your own project is a more complex matter. Lenders will take into account a variety of factors when determining whether to lend on an individual project.
Qualifying As An Applicant.
The elements taken into account include:
Experience - have you got the skills and track record to prove that you can complete the project as required?
Cash - have you, in the lenders' opinion, got enough of your own money in a project?
Location - certain lenders will only lend in their preferred locations. Believe it or not, some will actively avoid London, where most focus on it.
Costings - do the figures make sense? Lenders often receive applications for projects that simply don't work within reasonable lending parameters, such as loan to value.
Information Required By Lenders.
As well as the normal application forms and proof of ID, applications for development finance requires additional information to be supplied to the lender. These can be, but not limited to:
Development Appraisal - a document showing all costs of the project. It demonstrates that the project has been carefully considered and is actually viable and worth taking on.
Q.S. Report - Quantity Surveyors work closely with many lenders who rely on them to advise whether the build costs are accurate and correctly calculated. They are often used to monitor work and produce reports on an interim basis when draw downs are due.
Planning Detail - to ensure the scheme has the appropriate permission, all the relevant planning documents will be required.
C.V. - for most, experience is crucial so proving you have carried out similar schemes in the past is an important consideration for underwriters.
Proposed Exit - how is the loan being repaid. Most are by way of sale, some are refinanced, where the finished properties are added to a portfolio.
Contractor Details - in cases where the developer is employing a main contractor, the financier will want to have their details to make sure they have both the experience and financial stability to complete the project.