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Development Finance

Development Finance

Development finance is a type of mortgage or loan specifically to help you with a property development, renovation or conversion. It’s used for things such as to develop land on your property or knock down and re-develop existing property.

Development projects don’t meet the requirements for traditional mortgages and raising finance for developments can be difficult, which is why development finance can be a good option. 

If you’re looking to develop property there are a few things you need to consider in terms of how it works. 

  • You cannot borrow 100% of the build costs. You’ll need to be able to cover at least 30-40% of the development yourself. 
  • You don’t need to have purchased land in advance. Brokers can arrange the purchase of development land as well as the development finance. 
  • You’ll need to obtain planning permission.
  • Development finance loans are intended to be short term. For residential building projects loan lengths tend to be within 12-18 months.
  • The amount you will be able to borrow will be based upon Gross Development Value. Put simply it is the value or worth of your development at the end of the project. 

Every development is different and is assessed on a case by case basis by lenders. They will want to see a solid proposal.

You will also find that an experienced developer is likely to find it easier to ascertain development finance purely as they have a history of projects. However even if you’re a first-time developer new to this type of project it doesn’t mean you won’t be able to find finance; it just means they may delve a little deeper into your application.

Having an advisor can ensure your application meets the requirements of lenders, they know exactly what lenders are looking for so can tailor your proposal.

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