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Property development loans are offered by banks, financial institutions and specialist lenders for the purchase of land or buildings and then for the funding of construction and all associated costs. Property developers use them wherever possible so they can maximise leverage on their own capital. This allows them to develop many more schemes than if they used their own capital. They can be used to fund any type of residential or commercial property in the UK, lenders prefer residential properties however certain niche lenders will look at offering loans for commercial or mixed residential and commercial projects. Any project with a commercial element would need to have a forward sale or lease agreed with a strong covenant in place, this would guarantee their exit on the commercial element of the development.
Loans are available to both inexperienced property developers and also developers with a proven track record.
A property development loan allows you to borrow the funds to purchase the land or buildings with the minimum input of your own funds, this frees up your cash and will allow you to do more projects that if you used your own capital to fund the development. Even experienced developers who have the cash to complete the purchase and cover all development cost will use loans for the development. They see it as just another cost that is involved in the development of property no different than paying the builder, also the last thing a developer wants is to get part way through the development and run out of funds, in this situation it is virtually impossible to get a loan to complete the works as lenders view this as poor management and are so very wary to offer to fund in this situation. By taking a property development loan the developer secures the costs to enable them to complete the development and not get into financial difficulties. Obviously, they can be cost overruns as with any development costs can overrun when unexpected things crop up, funders will in these circumstances offer additional funding providing it fits within the loan to value that has been agreed on the original loan agreed.
Taking out a property development has many benefits, it gives you the peace of mind that all of your funding is taken care of on day one of the development, the lender will site aside the amount that has been agreed and you will be allowed to draw down the agreed amounts at site purchase and then pre-agreed amounts st key stages of the construction these would usually be site purchase foundations compete up to DPC, then shell up wall plate, roof complete, 1st fix, 2nd fix, and then on final completion. Some lenders are more flexible than others and will allow you to draw down funds on say a monthly basis based on a surveyors report on the amount of works that have been completed in each month, you will have to decide which of these options works best for your program of works and agree with the lender in advance.
How to get started with Loans For Property Development
Once you have found a suitable project the first thing to do is get an appraisal together outlining all of the cost you will incur in the development, this will include land/site purchase professional fees, architects, surveyors, building warranties construction costs and any CIL payments to the local authority and of course finance charges. Once these are finalised we will approach lenders who would be suitable to offer a loan on your project. We deal with virtually all of the lenders in the UK and will be able to tell you immediately if you would be accepted and give you a good indication on what the interest rates would be for your finance. We will also go through your appraisal and make sure that it all stacks up before submitting it to a lender for consideration, this way you will have the very best chances of getting your loan and at the most favourable rates. Once you have been accepted we will guide you through the process, dealing with any queries from the lender or their solicitors on your behalf, we have been dealing with property development loans for over 20 years and can bring a wealth of experience to deal with all of the pitfalls that can occur on the way.
What you can do now with property development loans UK.
Simply fill in our web form or give us a call and we will go through your project in detail and advise you of what your best options are we are available 24/7 and will take your call any time you are able to talk. As a specialist, we understand what it takes to get your funding in place and at the very best possible interest rates.
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