How much can I borrow?
The maximum loan on property development finance is worked out using several figures.
- Firstly, the initial funding will be worked out on the loan to value (LTV) of the site. Some lenders will ignore this figure, should the following figures be acceptable.
- The lender will then consider the total borrowing in relation to the end value of the build, this is known as the loan to gross development value (LTGDV).
- Finally, the lender will agree to fund a certain amount of the build costs, this is known as loan to cost (LTC).
When looking at commercial development finance, we can usually fund 55/65% of the initial acquisition costs and up to 60/65% LTGDV. Some lenders will restrict loan to cost. However, there are lenders who are willing to offer up to 100% LTC.
Roll up your monthly repayments
When taking out commercial property development finance, you can roll your monthly interest payments into the loan. This means there are no monthly repayments to make during the loan, subject to fitting the LTGDV criteria for the lender.
Each lender has their own way of handling the interest. Some will add the interest above the maximum LTGDV, whereas others deduct it.
We are able to offer finance to both experienced and first-time developers. If you’re looking to develop for the first time, we would highly recommend working with experienced professionals.
Whatever your situation, we will use our contacts across the market to secure the lowest commercial property development finance rates for you.
What we fund against
Commercial development loans can be secured for the following:-
- Construction of industrial buildings
- Land with planning for commercial property
- Construction of office blocks
- Mixed residential and commercial schemes
- Refurbishment or conversion of shops
- Office to residential conversions
- Refurbishment Finance
- Pub to residential conversion
- Builds on farmland
The above list is not exhaustive, if your enquiry relates to a different scenario, get in touch and we will let you know exactly what we can offer.
How can I give my application the best chance of success?
The key to giving your application the best chance of success is by reducing the risk posed to the lender.
As with all types of development finance, reducing the construction risk by ensuring that full details are given around your background and the strength of the team is a big factor.
Where a highly experienced team in this type of development are working with you, detail around them will be really helpful.
As commercial property tends to be less liquid than residential property, the exit is key. Where pre-sales or pre-lets are possible, they will make your application much easier to manage. By reducing the risk in this area, it will mean that the lender has less concern about your ability to repay them.
When looking at commercial development finance, the more comfort you can give the lender around sale or refinance to a commercial investment mortgage at the end of the build, the better.
Working with ABC Finance Ltd
At ABC Finance Ltd. we work with commercial development finance lenders across the market. Our experience with commercial developments means we can secure the best terms for our clients quickly. By working with us, you can access the whole market through one enquiry.
From the first conversation, right through to completion, we manage the whole process for you. This means you can relax while we negotiate with multiple lenders on your behalf to secure the best terms.
Enquire online now or call us on 01922 620008 to get a fast personalised quote.