What is Development Finance?
Property development as an industry has grown considerably over the past 10 years with more and more people entering the market. When deciding what type of funding is available and what is best for the project, it is important to know the differences as they each have a number of pros & cons. Over the next few articles, we are going to look at Development Finance and give you an overview of how it can be used and when it can be an ideal method of funding new developments.
Development Finance is a short-term loan that can be sourced to secure a property, carry our refurbishments or start a brand new development from the ground up and can be used for residential, commercial or mix-use property. It is mostly utilised by property developers & investors and landlords when working on larger value projects.
How long does Development Finance last?
Most development finance loans last for the duration of the build or renovation. However, terms can vary significantly from a few months to several years on larger commercial development projects.
What do Lenders look for?
Most lenders will consider loans on a case by case basis, and set interest rates accordingly. The loan is typically repaid when the project is complete, usually by selling the finished project or refinancing through a longer-term loan. Lenders will typically look for:
- The current value of the property
- The predicted value of the property at completion – Gross Development Value (GDV)
- A breakdown of the costs associated with the build
- Any drawings or plans you have from your architect.
- Your plan of paying off the loan – Sale or alternative finance.
How can Sterling Commercial Finance Help?
Development Finance can be complex to source and there are a number of hoops that you would need to jump through to find the right funder for the development. Our experience is in working with businesses looking for Development Finance and we help with:
- Ensuring that Development Finance is the right funding option – there is a myriad of choices to ensure you get the best return on investment.
- Ensuring that the right funder is found to provide the finance. We have access to over 200+ Lenders
- Everything is in place to ensure a smooth application – paperwork, property values etc. We can help you save time and stress by being by your side every step of the way.