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Property Development funding UK for property developers in the UK, this type of funding allows developers to raise finance against land or buildings for conversion of refurbishment of residential property in the UK, it also allows them to fund the development as it progresses through to completion each element of the funding is available at predetermined stages of the development. If you are looking to get funding for property development you will invariably find that almost all of this type of development funding is available through specialist lenders and not the high street banks. Although a high street bank would generally offer keener interest rates than would a specialist lender, this offset by the fact that they will only offer to fund developments first with existing clients and then only property developers with a wealth of experience and a significant track record of previous projects that have been completed successfully, they will also usually only want to offer funding for one development at a times, so even if you got funding from them you would have to wait until all of the properties are sold be any further finance would be offered.
Specialist lenders, on the other hand, are far more relaxed about who they will offer to fund, including developers with little or no previous experience and also if the developer has existing schemes that are still not sold or are being built out. Specialist lenders tend to be slightly more expensive in their interest rates but the ease of doing business with them and their flexible approach has meant that more and more developers are choosing to use their services, subsequently the number of lenders that have entered this area of finance has exploded with interest rates becoming ever more competitive and the loan to values being offered as increased substantially all of which benefits property developers.
Why Get Funding For Property Development.
There are many reasons that a property developer would choose to get funding for property development rather than using their own funds. The obvious one is that they can use their resource more efficiently and take on more projects and so increase profits accordingly. Also property development can tie your cash up for long periods of time with the typical project taking at least twelve months and then you would need to factor in a sales period of up to six months in order to allow the properties to sell and complete, so it is important to make sure you have enough cash to tie you over until the project has sold.
The good thing with specialist lenders is that you can borrow up to 90% of all costs against the development, allowing you to retain some of your own cash as a cushion should you sales not come through as quickly as anticipated. You only need a slight slowdown in the market and things can literally cease up so keeping some of your own cash at a bank will give you the comfort of not having to sell quickly if things do slow down.
When you take a loan for property development funding you guarantee that providing there are no unexpected costs or extras that come up during the build that you have the funds in place to complete your development, the amount is agreed at the outset and you do not have to worry that you are going to run out of funds in order to complete your development, furthermore if you do encounter unexpected costs very often a lender will look towards helping fund them providing the loan to value is still within their loan criteria.
Also if you do not manage to sell the properties before the loan expires than you can usually agree, an extension of the loan for up to 6 months, this will take the pressure off of you and allow you to sell the properties with being pushed into a quick sale.
How to get started with funding property development
Obviously, first, you will need to find your project be that land or a building for refurbishment or conversion, it is important all of the numbers stack up and that the development gives a minimum return of 20-25% profit on your total investment.
Once you have your site you will need to produce a complete breakdown of every single cost that you are going to incur in the development of your project, this should include any abnormals that the site has this would be anything that is not a part of a normal development, you would usually take this off of the land value, any fees that your architect is charging you, planning costs including any payments to the local authority, structural engineers fees, fees for building regulations and building warranties, the cost of all construction including external works and landscaping, and selling costs including estate agent and solicitors fees. Once we have these we can quickly identify how much a lender would offer you and the suitability of your project to our lenders we deal with
Funding Property Development What you can do now
In the first instance get in touch either through the website or give us a call on 0800 138 6001 and we will quickly be in a position to tell you if you would get finance for your project and at what interest rates.
With over 20 years experience you can be assured of the very best help and advice from our team.
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