Whether you’re a first-time property developer or an experienced property developer wanting to fund your next endeavour, there are several property development lending alternatives that don’t require pre-sales or long application processes. With prior credit concerns considered, you can have up to 100% of building costs covered. If you have a project but are held back by finance requirements, development finance for residential or commercial property will help you complete your project sooner.
Table of Contents
What is Development Finance?
Development finance is a short-term funding option, often lasting 6 to 24 months. It is intended to help with the buying and construction expenditures of a residential or commercial development project. This can be a new build, conversion, or refurbishment of a single unit or numerous units built over several phases.Unlike other types of financing, development finance does not normally advance the entire sum borrowed all at once, unless your project is very small. Instead, as the development project advances, the lender will release further funds in stages.
Types of Development Finance Available:
- Purchasing the site
The initial component of the money is frequently used to help with the purchase of the development site. This could be land on which several new properties will be built or an existing property that will be renovated.
- To pay for the construction costs
The second stage of the loan is utilised to cover the costs of the project’s construction. This is frequently pulled in phases rather than being handed in one lump sum. This is usually done once a month once the project is completed.
Advantages of using a private lender for Development Finance:
- The capacity to get funds on properties, plots, and developments that other lenders may deem unsuitable or unviable, such as rundown or abandoned buildings.
- Development funding can be returned rapidly, reducing overall borrowing costs to a minimum. Far less expensive than many long-term loan options.
- Interest is only paid on funds withdrawn, which might have a favourable influence on the overall costs of the facility. A specific advantage of releasing funding in phases throughout the project.
- If the project is considered viable, development finance may be made available to cover up to 100% of the costs, regardless of the final construction cost.
- Finance can be fast so projects won’t be held up by financing or repayments.
- If you have access to development money, you can explore taking on more ambitious projects or even carry out multiple development projects at the same time.
The most significant advantage of development financing is that it allows borrowers to access significantly greater sums of money. In reality, it is the most comprehensive borrowing arrangement. To begin, funds are allocated to get the project started. More money is issued for the developer as the project progresses, grows, and gets closer to its goals. The total amount borrowed can be up to 100% of the total cost of construction, with no upper limit on how much can be borrowed.
If the banks aren’t revelling in your aspirations, contact a local private lender such as IBN private to find a smarter finance solution for you.