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Residential Development finance is a form of finance that is used by property developers to develop and sell residential properties, Residential Property Development Finance is quite different from other finance and loans in that it is drawn down in stages rather than the whole loan being advanced in one go with a traditional loan the bank will give you all of the money in one go. With residential development finance you would receive the funds at key stages of the development these would be set out before you receive the finance and would be at predetermined stages the first one being the actual land or building purchase if you are doing a refurbishment or conversion project after this you would only be able to draw funds down if you have met key stages of the construction and after a surveyor has confirmed to the lender that these key stages have been completed, typically they would be when you have built up to dpc stage and ready for the floor, then after you have reached wall plate this is when you are ready to put the roof trusses on and then perhaps when the roof work has completed, the next stage would be when the first fix plumbing and electrical works have been completed, you would then need to get to 2nd fix which would be plastering completed and 2nd fix plumbing and electrical works, the final drawdown would be on practical completion i.e all works complete and the property is ready to sell.
Why you Need a Residential Development Finance.
Using residential development finance allows you to secure all of your funding requirements in one go you will be assured that you can drawdown you finance after you reach all of the key stages of your construction project. The lender will expect you to put up to 10% of the cost in yourself and the will cover up to 90% of all the costs you incur this will enable you to get the maximum leverage on your existing capital, items that can be funded with Residential finance are, Architects Fees, any CIL or section 106 payments to the council, Structural engineers, and all construction costs that you need in order to complete your development, lenders will also roll up all of the interest payments on the loan until you have completed and sold the development, this means you will not have to make any monthly payments on the loan until you have built and sold the properties this is why developers prefer to use Residential Property Development Finance to fund their developments.
Because you can get up to 90% of all costs you only need 10% of your own funds on each project this will allow you to make your cash go further and do many more projects than if you self-funded the whole project. This is why experienced property developers even if they could self-fund use development finance to carry out their developments. Obviously the high percentage that you require the more in interest you will pay but then you have to factor in that you could make your cash go further and do more projects, you really have to decide what works best for you and each development is unique it may be that you only need to get 70% of costs and then you would receive a lower interest rate, we work with our clients to get the best possible deal for your circumstances.
How to get started.
First we would need details of the development that you want to fund where it is what the scheme involves and full details of all of the cost you are likely to incur, these would include professional fees such as Architects, quantity surveyors, structural engineers, what you're construction costs are going to be and any other fees that will be payable such as CIL payments or section 106 payments to the local authority. We will go through all of the costs and resale values of the properties and make sure a lenders would be interested in funding your project. Providing the numbers stack up we would approach suitable lenders with your proposal and come back to you with any offers of funding and what the terms will be I.E Interest rates arrangement fees and valuation fees. Once you are happy with these and ready to make the loan application we would deal with the whole transaction for you from beginning to the final drawdown of your property development finance.
What you can do now.
Contact us either through our web form or give us a call we are available to take your call seven days a week and we will then have a quick chat about your project and tell you if you would get the funding you require. We have over 20 years experience in dealing with residential development finance and have arranged 100s of loans for our clients. Contact us Now.
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