Development Finance.

We arrange development finance for you for all kinds of projects. Are you are looking to build residential houses or commercial units from the ground up? Or, perhaps you want to refurbish an existing property or convert an old commercial unit into residential flats.

With over 10 years experience in the development finance your project is in good hands. We are not tied to a particular bank or lender so we search the market for you to find the best possible rates and terms. It’s not just about getting your development underway, our facilities can help ensure you make as much money as possible.

We have a large panel of lenders, based all over the country. Our network allows us to help you:

How Development Finance Works.

This is a specialist finance facility, typically used by developers and builders to fund various projects.

Development finance can be used for different sized projects. You might want to build a single residential house right up to a large housing estate. It is not just for new builds. You can use funding if you want to convert a house or industrial unit into flats or even a large listed building into smaller houses.

As well as residential projects, development funding can also be used for commercial projects. You might want to build a new warehouse or industrial unit to let or use for your own business. Or, you could be planning to build a hotel or even care home.

Finance for property development is a short term option, giving enough time to cover the build period as well as time to sell or refinance. In a lot of cases, the loan would be paid back in stages, as units sell, reducing the balance until the finance is paid off.

Lenders take into account the value of the land as it is and the end value ( GDV ) of the project. Lenders are typically happy to provide 100% of the build costs and help towards land purchase up to 70% of the GDV.

Finance to pay for builds, or other work, carries more risk to the lender than something like bridging, so lenders will want to see there is a good profit at the end of the work.

Most lenders will only lend to people with experience and a track record. If this is your first project, though, we still may be able to help you.

Interest Rates.

As with bridging, one of first questions we get from clients is about the interest rate they will be charged.

It’s a valid question, of course, but without getting into your specific project it is very difficult to answer. We have lenders with interest rates starting at around 6.5% per annum going up to 2% per month. Quite a range!

There are various reasons why the rates vary so dramatically. Location plays a part, for example. In London where there are more lenders vying for business, the rates are likely to be cheaper with lower rates easier to find.

The amount you want to borrow also plays a part, with cheaper rates typically available for loan amounts above £500,000.

Interest rate should not be looked at in isolation, there are costs and fees that come with development funding that you must pay attention to. You can read more on this page about development finance costs.

Developer Finance Features.

Development Finance is different to other types of finance in that it has some distinct features.

Draw Downs.

The loan will be split into stages, often pre agreed at the start. The advantage is you don’t pay interest on the money that you haven’t used. If you took the loan in one lump sum you would have costs for money you don’t need yet.

Interest Roll Up.

Most development facilities don’t require monthly payments for the borrower. Instead, the interest is either added to the balance each month or deducted from each stage of draw down. Either way, your normal cashflow is not affected.

Simple Loan Application Process.

1. First Conversation.

To start, you tell us about your project and how much you need to borrow.

We have a conversation with you to find out as much detail as possible about you, the project and the figures involved. During that first conversation we can give you a very good idea of what we believe the cost of the finance will be.

2. Information Request.

We will request information from you, most of which you will probably already have, and package it up to send to our panel of lenders. With over 100 on our panel, we are sure to be able to find finance for most circumstances.

Development is more complicated, so more information will be needed than for a normal loan. The items required can be:

3. Working With Lenders.

We take your information and send it to the most suitable lenders. Although we have more than 100 on our panel, you can appreciate that not all are perfect for you. By picking and choosing we can cut down the time taken to get you to the right finance.

Ideally we have given the lender everything they need to make their in-principle decision. It may mean coming back to you for specific information and relaying that back to the lending manager.

At the end of this stage you will have a firm decision from the lender, subject to legals and their own professional reporting.

3. Begin Formal Application.

We work with you and the lender to push the application through to completion. This includes making sure solicitors are dealing with their side and reports are sent back in good time by valuers and QS’s as needed.

4. Completion and Draw Down Of Funds

When the legal work and other reports are finished the lender will start drawing down funds to you. The loan will be split into stages, so you go back to the lender each time you need a new tranche of funding.

Different lenders have different ways that they qualify you for draw downs, these can include valuation or more commonly QS reports or Engineer reports to confirm the build is being carried out properly.

What Can Building Finance Be Used For?

Whatever the project you have in mind, there is a great chance we can get you funding for it.

100% Development Funding.

Most development lenders will offer you 100% of the build cost and up to 60% of the purchase of the site. Some can even do more than this by using Mezzanine finance to top up their facilities.

The majority of providers want you to have at least 10 or 20% of the cost covered using your own capital, “skin in the game” as it is often known.

If you need development finance to cover 100% of all costs there are limited opportunities. To be able to source this for you will require a lot of experience from your side as well as a very profitable project. Don’t expect to keep more than 50% of the profit – the lender will want their pound of flesh!