Property Development Finance Explained
My Property Hub works in partnership with the country's biggest lenders to tailor development loans to suit our clients and their properties. We are experienced in arranging loans for the development, redevelopment or refurbishment of commercial and residential property.
Property development finance is short-term funding for small building firms and self-builders taking on specific projects from refurbishing a home to building a shops, homes or industrial units from scratch.
Experienced builders and property investors can borrow up to 100% of the money needed to complete a project- although lenders have tightened their purse strings lately and are more likely to restrict lending to no more than 70% of the property cost and 70% of the build cost.
Development finance is structured to match a project, which can mean borrowing against the gross development value at the end of the build. Rather than lend a against asset value, the finance is generally advanced in stage payments against agreed build progress – like completing the groundwork, making the building watertight or completing the first fix.
Lenders also like to see an exit strategy, which is arranging to repay the development finance at the end of the project; by selling the property or remortgaging with a second lender.
Property development lenders tend not publish a list of interest rates. Loan costs depend on the builder’s experience and property type, but developers should expect to pay at least 2-3%above the lender’s base rate. Costs also depend on whether loan interest is rolled up or deferred until the end of the project (this can ease cash flow through the project but make the overall cost more expensive). Developers can also expect to pay booking fees, valuations and arrangement fees for their borrowing.My Property Hub has teamed up with XXXX to offer competitive deals on property development loans. To find out more click here or fill-in our online contact form and we’ll get back to you.