development finance loans explained
1. Arrange Initial Land Purchase Funds
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.
development finance brokers help arrange the funds
An expert development finance broker will arrange initial land purchase funding for your next property building or reconstruction project. For example, you may have plans to buy land and build several new houses. Your broker must secure financing for the land purchase and the initial construction work. If you as the developer can sell the first completed home, you can ensure sufficient financing for constructing the other houses. In this case, you only need your broker to locate funding for finalising the building of the first home.
If your development finance broker locates a bridging loan broker who is also a mortgage broker, your more complicated development deals can also be funded. This broker can determine when a bridging loan is the most appropriate type of loan for your project. If a longer-term loan or a mortgage is the better option, the broker can advise you and move ahead to secure this financing as needed. Some building projects require different forms of funding after various phases of the project are finalised. This knowledgeable broker can assess these different lending methods and decide which is the best choice for each stage of your current real estate development job.
You may have plans to start development project construction on a rundown or derelict property. If so, you will most likely have difficulty in acquiring a standard mortgage. This is due to the fact that these older, damaged buildings are often seen as unfit for inhabiting, even after extensive reconstruction. However, your experienced broker can arrange for a bridging loan for updating this property. After a thorough upgrading, even a property that was once derelict and unattractive can qualify for a mortgage. After full development and renovating, this property can then be sold or leased for profit. Total financing repayment plus deferred interest payments can be made easily at the loan term end.
Your versatile broker can also advise you concerning Section 106 provisions. If your current development site involves the construction of nine houses or less, you are typically exempt from making any of these new residences affordable housing. Requirements may vary somewhat in different locales. However, your experienced broker will be fully informed concerning these requirements. If your current building site is required to include some Section 106 housing, one option is to create “Rent to Buy” houses. These units will be sold to the local housing association by the builder at a discounted rate of approximately 30%.
2. Arrange 100% Build Cost Funds
Your property development broker can arrange 100% development finance for your current and future building plans by using the best property development loans. This type of funding is also known as Joint Venture Development Finance. With this method of project funding in place, the lender issues the sum of the funds necessary for acquiring the building site and completing project construction. When a finished site is sold, the resulting profits can be shared by the developer and the lending agent with 100 percent build costs funding. In most locales, you must be an experienced developer and already have obtained planning permission for your project in order to receive this form of financing.
To be certain that you can secure 100 percent build costs funding for your building project, you need to be an experienced developer with an excellent track record. It may also be necessary to already have approved plans permission before receiving this full funding. In some instances, you must have a high GDV, often above £1m as well as a good return on investment (ROI). Interest payment requirements can vary according to your lender’s provisions. Some lenders allow rolled up interest. Others do not charge interest, but take a share of the profit in lieu of these payments.
If you are known for an impressive track record of completing profit-making developments, lenders are usually more flexible in structuring loan repayment options. They are quite willing to work with you and consider your preferences when setting your borrowing terms. Since they know that they can count on making a good profit on your completed property development project, these lenders will also be eager to work with you toward the finalising of your future building sites.
Although the property development industry can present some difficulties for new developers, once you are more experienced and successful, you will find top-rated assistance from reliable lending sources to fund your development plans. These experts will offer the best options for obtaining 100 percent build costs funding.