Development finance loans for builders, how they work? what the process is, and how a development finance broker can help you
If you are a property developer in the UK, using an experienced bridging loan broker can help ensure the success of your projects. Your broker can arrange the necessary funding for financing each building project. Securing the most reliable and effective financing for purchasing and developing properties can be complex and time-consuming. By working with a professional bridging finance broker, you can benefit from the ideal methods of acquiring funding with the best property development loans. You and your property development team can be free to focus on the varied and important aspects of your building or reconstruction plans while your broker obtains the initial funding needed.
Stage payments throughout a property development project are essential for ensuring the steady progress of work and a timely completion of each project. The lender and builder-developer first agree on the timing of the payment releases for funding during the job. Compliance with this agreement is monitored by an onsite surveyor who “signs off” on the completion of each stage of building. This can ensure that the project stays on track toward completion. The surveyor examines the quality and extent of the finished construction work as well as cost management of the overall project. Both the developer and the lender want to make sure that smooth, seamless progress can be made on a building site without delays. This can be ensured with the use of the best property development loans.
After the onsite surveyor approves the last completed stage of development, the next stage lending payment can be made so that work can continue as planned. New builders often put the greatest emphasis on arranging the initial funding needed to purchase a building site and begin construction. However, maintaining a steady cash flow throughout each project is just as important. When the developer and the lender follow a sensible and practical work progress and stage funding schedule, the workflow can continue without undue interruptions. A good cash flow forecast before initial building work begins is also essential to the timely completion of a development project.
When you present an accurate building schedule and cost plan to your lender at the onset of your project, you can benefit from good cash flow projections. Although many lenders are quite willing to issue equal loan amounts each month, you will need more funding for certain stages of your project than for others. If building progress for one month requires more funding than you receive, this will delay your construction. Yet if you receive more funding for another month when you need less, this can cause you extra expense. Drawing down too much funding for one month can result in larger interest charges, which can reduce the project’s overall profits.
When your real estate development project is completed and you are near the end of your loan term, you may need additional funding. These funds are essential for any more expenses that you incur while you seek a buyer for your development. Perhaps you have located a reliable buyer, but the closing date has been delayed. You may also need to cover a high rate on final repayments of your current building loan. With quality development exit finance, you can successfully replace your current funding with effective short-term financing that is affordable and can be obtained without delay.
Whether you want to sell your recently completed property development or to lease the site or its separate units for profit, interim funding can be essential for reaching you goals. If you have completed a development site in partnership with other developers, you may want to acquire partial or total ownership of this real estate for residential or commercial leasing. With the well-structured interim funding of this short-term exit finance, you can move ahead with your plans for profiting from your property development.
Key features of the best development exit finance include the following:
The property development industry can be quite profitable and rewarding when a project is completed with expertise. Of course, one vital criteria for a highly successful development is seamless and effective financing. Although there are always risks involved, by working with an expert property development broker, you can avoid the perils of unwise risk-taking and benefit from the best-suited types of funding to complete your building or reconstruction projects.
Especially when you have a time-sensitive project or a complex reconstruction deal, you need the expertise of a top-rated broker to ensure project success. Your experienced broker can arrange a combination of bridging finance and commercial mortgages or other types of longer-term loans as needed. Your broker can secure funding that, in some cases, can even be repaid early. You can then enjoy the success of completing a project with financial repayments already made. Your expert broker can help you achieve this goal by locating the best lenders to completely meet the needs of your property development projects.
Don’t forget to read the other sections, for more information an help on understanding bridging loans and how they work.
If you need to understand how development loans work, or want help in securing a bridge finance loan, then get in touch.