Securing funding for property development has never been easy – property development loans are, for the most part, substantial and long-term, and thus pose many risks for lenders. Today, when many banks are still recovering from the financial crisis, getting good terms for these loans is quite a challenge.
The following tips should help: Understand how banks assess your risk as a borrower
When reviewing funding for property development applications, lenders look at two things: the viability of the development, and your financial strength. The security you are willing to offer also matters, but less than the other two factors.
Submit a complete and professional application
Your application should include proof of the planning approval papers, a feasibility study of the development, cash flow projections, evidence of your financial strength, zoning, design concept, costing, timelines, and other extensive details about the project. All these will take a while to compile, but they can be extremely convincing.
Provide at least 20-30% of the funding yourself
Getting 100% funding for a property development is tough – you could be stuck with high interest rates. If you cannot provide any of the funding, look for partners. Generally, the larger the scale of the project, the more funding you will be expected to provide.
Keep in mind that banks are not the only source of funding
Banks remain the biggest source of funding for developers, but since they have become much more selective with their borrowers, you should consider private and joint venture funders too. Finding these won’t be easy, but professional loan comparison services can assist you.
Funding with Compare The Financial Markets
Lenders favour borrowers who take the time to compile a convincing loan application. So, if you really want to get funding for property development, do invest in extensive project studies and projections.
Talk to the experts at Compare The Financial Markets.