Who Can Apply?
Applications for property development loans are usually done in the name of an SPV Ltd. Company. This is a company set up solely to deliver the specific project.
Applications can be made in sole names, LLPs or Ltd. companies.
Regardless of the structure of the application, lenders will generally look at the experience, financial situation and history of the applicants/people behind the company. Usually, personal guarantees are required as additional security for the lender.
How Much Can I Borrow?
We offer development finance from £50,000 with no maximum. Most lenders state set maximums but are willing to be flexible for a particularly strong scheme.
If your loan is particularly large, enquire online now and one of our property development experts will talk through your requirements in full.
What are the Next Steps Once My Application Is Accepted?
Once the lender is happy with your project, you will have to wait for the following to take place prior to completion:
- Lender site visit
- Completion of the legal work
- Valuation of the site
- Credit committee approval
Repaying Your Property Development Loan
Repayment of your loan is usually achieved through one of the following three routes:
- Sale of the site
- Refinance to a developer exit product whilst the site is sold
- Refinance to a term loan
Whichever route you are planning, it is important that your exit strategy is clear upfront. Lenders will want to make sure you know exactly that your plan is secure.
If you’re planning to refinance and hold the properties, inform your ABC Finance Ltd. development finance consultant upfront. They will be happy to give you an initial overview of likely costs to help you in projecting future income.
Having the exit lender tied up upfront will help your application as it shows the lender that you are prepared, and all bases are covered.
Development Finance for Overseas Applicants
We can fund UK property developments for overseas applicants. Applications can be for foreign nationals, expats and can be agreed even if the applicant has no ties to the UK. The applicants would usually have to set up an SPV Ltd. Company to purchase the property and complete the transaction for the loan to be agreed.
As this would be classed as a very specialist transaction, discussing your circumstances with one of our experts prior to application would be advised.
How Do I Compare Offers from Different Lenders?
The process of comparing offers from multiple lenders can be more complex than with other lending products such as residential or commercial mortgages.
This is because each lender has their own names for different types of fee and may even express interest in different ways.
Some lenders will express the interest as an annual figure, while others will use a monthly amount.
Equally, some lenders will charge exit fees – some based on the loan amount and others on the GDV (gross development value).
As such, when comparing lenders, the simplest way to calculate the total cost where all fees and interest are rolled up is to deduct the net loan from the gross loan. This will give you the total borrowing in a transparent way that is easy to compare between lenders.
If there are fees or charges that aren’t added to the loan, simply add them to the figure mentioned above to give a true cost.
How Do I Secure the Best Possible Rates?
As a lot of development finance applications have their pricing tweaked depending on the perceived risk of the application, there are a number of ways you can improve you pricing.
As experienced experts, we will always work with you to ensure the best possible terms are achieved, but there are things you can do yourself to help. These include:-
Ensuring that your development CV is completed to a high standard – detail is key.
Make sure that your schedule of works and costs is accurate and realistic.
Do your research on proposed sales, liquidity of the asset is key for lenders.
Ensure your credit history is as strong as possible, consider repaying any missed payments, defaults and CCJs before applying.
Apply Online Now
Select the most suitable lender for your project and apply online now to start saving money. If you’re not sure which product would be best for you, call us today on 01922 620008 or enquire online. We can talk your project through and help you to secure the lowest rates for your project.