Funding Your Upcoming Projects
Taking on a new development project can be a daunting task with all the steps that need to be followed. But when it comes to funding you can lean on us to get the financing you need.
In the property development world Cash really is King as a wide variety of issues can occur – from Labour work delays and construction difficulties to meeting tight deadlines. Therefore, it’s important to stay liquid to deal with these situations as they arise.
Depending on the property work needed, we can arrange Bridging Loans, Development Loans (light/medium/heavy refurbishment) and BTLs for exit should you require.
Competitive PricingLight/Medium/Heavy RefurbishmentAccess To Whole Of MarketRetained/Serviced InterestLend Against GDV
How to Get 100% Development Finance
While obtaining 100% development finance is challenging, it’s not impossible. Although not structured in the way you maybe envisioning. Several financial institutions and private lenders offer high Loan to Cost (LTC) ratios. However, these often come with stringent criteria and may require additional security or higher interest rates. A solid project plan and financial stability enhance your chances of securing full financing. Any lender will want to see some skin in the game/ equity contribution from developers to get comfortable to lend – this equity contribution can be raised via remortgaging/ financing background assets/2nd charges and so on to secure the 100% funding solution.
Alternatively, equity providers are also available to plug the gap should other background assets not be available to leverage; however, will be caveated with stringent criteria and higher pricing.
How Is Development Finance Calculated?
Development finance is often calculated based on the Gross Development Value (GDV) and Total Development Cost (TDC). The LTV ratio is then applied to the GDV, and the LTC ratio is applied to the TDC. The difference between these amounts and your equity contribution determines the loan amount.
How Much Deposit Is Needed for Development Finance?
The deposit required for development finance varies but is typically around 20% to 40% of the total project cost to have access to market leading rates. This equity contribution demonstrates your commitment to the project and helps secure financing.
What Are the Stages of Development Finance?
Development finance typically unfolds in stages:
- Land Purchase: Financing for acquiring the land where the development will occur.
- Pre-Development: Covers initial planning, design, and obtaining necessary approvals.
- Construction: Funding for the actual building or development phase.
- Exit Finance: Transitioning from development finance to long-term financing or selling the completed project.
Will Banks Lend to Property Developers?
Yes, banks are among the common sources of development finance. However, the approval process can be rigorous, requiring a strong project plan, experience in property development, and a robust financial profile. Alternative lenders and private investors also play a significant role in the development finance landscape.
First-Time Developer Finance – 5 Tips to Get You Started
- Thorough Research: Understand the property market, development process, and financing options.
- Build a Strong Team: Collaborate with experienced professionals, including architects, contractors, and financial advisors.
- Solid Business Plan: Develop a comprehensive business plan outlining your project, costs, and revenue projections.
- Start Small: Consider smaller projects for your first venture to minimize risks and gain experience.
- Network: Connect with experienced developers, industry professionals, and potential investors to expand your knowledge and opportunities.
How Much Development Finance Can I Get?
The amount of development finance you can secure depends on various factors, including the scale of your project, the lender’s policies, and your financial capacity. Generally, lenders offer Loan to Gross Development Value (LTGDV) ratios up to a 75% maximum, meaning they fund a percentage of the project’s total value which will be capped up to a maximum of 90% total cost of the project (LTC).