Property Development Finance UK – How does development finance work?
It is a sobering legitimacy that the success of any commercial project or new build is often less dependent on the prime location, innovative architectural design or high-quality workforce than on the availability of flexible and affordable finance. New developments require finance, and most of the time, finding the right size of loan that is flexible and competitive can be a headache for most developers. Choosing the right broker can save your precious time and resources.
In this guide, we reveal the secrets of success that commercial new build developers are looking for – Property development finance and how it works. The key features of property development finance in the UK are getting loans from £200,000 and above. It is a short term financing solution that facilitates and speeds up the process of a new build project. These are complex funding arrangements to set up for developers who are willing to borrow. At Fin space, we will do our best to help and find a finance solution for you. Stop! First, let’s rewind a bit and understand what property development finance is and then proceed further.
Development Finance Decoded
Property development finance is a short-term property loan with an extended six to eighteen months time frame. It helps developers to fund their projects. You can get property development finance in the UK for commercial, residential, and mixed-projects that include new builds, conversions, and heavy refurbishments. These are some of the main reasons developers require development finance.
How Does IT WORK?
Development finance is more technical than a standard mortgage, with advanced funds upfront and then throughout the build. Funds are drawn depending upon the site’s value; in most cases, day 1 drawdown can be up to 60-65% of the loan amount.
Once the work has begun, funds are released based on pre-agreed milestones, with lenders willing to advance up to 100% of the new-build costs in some cases. To agree to each stage, the site will be surveyed by the lender. If the works are proceeding as planned, and there is sufficient value added on-site, the next stage of funds will be released..
Let’s conclude by listing the key benefits of property development finance UK.
- Cash flow
- Increased profit
- Less risk
- Reduced overheads
If you plan to apply for property development finance, considering a broker is a good idea. You can expect greater clarity regarding how much your loan will cost and which package suits you best with them. Before you seal the deal, connect with the professionals and select the best options because, as mentioned above, finance decides the project’s future. They will make sure what lenders’ offer are to your benefit and requirement.