Property Development Loans Explained For First-Time Borrowers
Big lenders offer residential and commercial property development loans to help groups or individuals planning a property development project acquire the necessary finance. These loans are generally long-term and large, and offered only after the borrower passes a thorough application process during which they prove their financial strength and ability to pay back the borrowed finance.
There are several property development loan options. There are those that cover up to 75-80% of the project value, and can be arranged against the gross value of the development. They typically feature arrangement and exit fees. One-hundred-percent property development finance is harder to get, but if you expect your project to bring you high profits, you might be able to get it. Some lenders in the UK also offer joint venture finance with up to 100% financing in which you get paired with a partner of the lender who provides the financing the bank does not. You will have to share profits with the partner.
Uses and Interest
Property development loans, as offered by the big lenders, cover not only the land purchase and the building costs, but also those related to infrastructure and project promotion. Interest rates can be both fixed and variable. When it comes to property developments, one type of rate is not necessarily better than the other, so it all depends on your circumstances.
Increase Your Approval Chances
It should be noted lenders are more likely to approve your application for a property development loan if you have a big project that has already planning permission and project plans, as well as some projection of the cash flow. This helps lenders accurately determine how many risks they will take by financing you.
Property Developments with Compare The Financial Markets
Property development loans can be beneficial for investors but, due to the many options, can be extremely large and complex. Use expert loan comparison services to find the best lender for your development project.Talk to the experts at Compare The Financial Markets.