Regulated Development Finance

Home » Types of Development Finance » Development Finance » Regulated Development Finance

DEVELOPMENT FINANCE MENU

What is Regulated Development Finance?

Regulated development finance is used to fund the build of property that is to be used as a primary dwelling of the borrower. Development finance applications become regulated if 40% or more of the property is to be used as or in connection with a dwelling.

Regulated development finance applications are usually used when a plot of land is being purchased to build a new home, or when planning has been granted for a property to be built in the garden of the client’s current home.

Read on below to find out more or fill in the form to talk to an expert.

Ask An Expert

Fill in the form below to talk through your requirements with an expert.

  • No upfront fees

  • Expert broker service

  • Market leading rates

  • Terms in 1 hour

Or call us now on 01922 620008

Latest Regulated Development Finance Offers

View some of the latest regulated development finance offers from major lenders.

Product DF0003 - Apply Now
Interest Rate
7.00%
Arrangement Fee
2.00%
Max LTC
90%
Max LTGDV
60%
Min-Max Loan
£500,000 - £20,000,000
Max Term
18 Months
Experience Required
Yes
Notes
Exit Fee 1% of GDV
Product DF0014 - Apply Now
Interest Rate
11.4%
Arrangement Fee
2.00%
Max LTC
90%
Max LTGDV
60%
Min-Max Loan
£150,000 - £2,000,000
Max Term
18 Months
Experience Required
Yes
Notes
No Exit Fee
Product DF0021 - Apply Now
Interest Rate
21.00%
Arrangement Fee
2.00%
Max LTC
100%
Max LTGDV
65%
Min-Max Loan
£500,000 - £10,000,000
Max Term
12 Months
Experience Required
Yes
Notes
JV - Profit Share On Completion

Criteria

Below are the main criteria points to consider when taking out regulated development finance.

1Raise money to build your own home
2Market leading interest rates
3Loans from £50,000 – no maximum loan
4No experience required
5Terms available up to 24 months
6Exit must be realistic
7Adverse credit considered on a case by case basis
8Interest can be rolled up – no monthly payments to make
9Borrow up to 100% of build costs

How Much Can I Borrow?

We can offer regulated development finance from £50,000 with no defined maximum loan.

The maximum loan will be decided by the value of the site at the start of the build, and the end value, also known as the GDV.

Do I Have to Make Payments During The Loan Term?

Most facilities allow you to add your monthly interest costs onto the facility amount, leaving you with no monthly repayments to make. The interest is then paid back in full along with the facility when the loan is redeemed.

This relieves you of a further monthly cost at a time where your cash flow will generally be extremely challenging.

Of course, if you would rather make the monthly payments, you are able to do so, although this is rare.

When adding interest to the loan, it will generally then gather interest the next month, compounding the cost.

How Are the Funds Released?

Funds are released in stages throughout the loan term. The exact figures on what funds can be released at each stage are calculated on a case by case basis based on your schedule of costs and schedule of works.

Generally speaking, some funds are released upfront to acquire the site or to allow you to start works if you already own the site.

Funds are then released in stages as the build progresses, often monthly. Funds are usually released in arrears, meaning that you are reimbursed next month for the funds spent this month. As such, sound cash flow management is key during the build.

How Much Will It Cost?

Regulated development finance is priced on a case by case basis and our advisors always look to secure you the lowest possible rates.

On occasion, we may be able to fund your development through a self-build mortgage, which will usually work out much cheaper.

As there are so many different routes available, immediate pricing isn’t always easy. Although, we commit to send you full terms within two hours of your enquiry.

How Do I Repay My Loan at The End of The Term?

Development finance is usually repaid through the sale of the finished properties at the end of the term. Although this is an acceptable exit strategy for regulated loans, the property is usually to be lived in at the end of the term.

Where this is the case, a mortgage is usually arranged to repay the loan. Your development finance lender will usually look for proof of this by seeing an agreement in principle from your proposed lender.

How Does It Compare to Self-Build Mortgages?

While both products can provide the funding needed to build your own home, self-build mortgages are generally cheaper than development finance. As such, they should always be your first port of call.

There are a few things that could mean that it isn’t possible. The main reasons are the following:-

  • You have an imminent change of circumstances – for example, adverse credit which will be off your credit file by the time that the build has finished. In this case, you may not be eligible for a mortgage today, but will be by the end of the build.
  • The security is too complex for a self-build mortgage – this could be the build of two houses, of which one will be occupied, and one sold for profit.
  • In addition to the above, the trade-off of the low rates offered by self-build lenders is that there are usually very strict terms and conditions that may not suit all borrowers.

    In addition, you are normally expected to pay the interest charged on a self-build mortgage monthly during the build, which could strain your cash flow.

    Get in Touch

    ABC Finance Ltd. are dedicated to getting the best possible results for our customers. From the first point of contact, right through to completion, we manage the whole process for you. This means you can have the peace of mind that we’re negotiating with multiple lenders to secure terms that suit your needs.

    Enquire online now or call us on 01922 620008 to get a fast personalised quote.

    about-the-author-gary-hemming

    About The Author

    This content was produced by our Commercial Lending Director, Gary Hemming. Gary has over 15 years’ experience in financial services and specialises in bridging loans, commercial mortgages, development finance and business loans. He is widely respected in his field and regularly provides expert commentary for specialist trade publications, specialist business press as well as local and national press.

    Gary Hemming CeMAP CeFA CeRGI CSP  -  
    Commercial Lending Director

    Want to Know More…?

    Use the panels below to read more on Development Finance.