Property development financeMembers of the National Association of Commercial Finance Brokers

As an established and experienced finance broker, Enhanced Wealth Limited can offer mortgages for almost every circumstance. This experience also extends to commercial finance for property development where we have advisers with the necessary specialist knowledge who can help you finance your project.

Property development loans come in all shapes and sizes and we are confident in our ability to arrange the required finance for property developers. We can help if you need funds to:

Commercial lending institutions will all have slightly different views on the lending market and where they wish to position themselves. Some take a higher degree of risk, some only wish to trade within certain areas or industries and some are not happy lending for property development purposes.

Fortunately, many of our key Banking partners are happy with financing property development projects, based on a history of successful outcomes for both the bank and the customer. These commercial loan lenders actively seek out property development business and are quite prepared to accept the risk of development finance, because they understand it and are set up to deal with it; quite simply, they are not “dabblers”. These organisations have dedicated sanctioners, who have years of experience accessing the feasibility of a development project.

Where do we fit in? What can we do for you? How do we make a difference?

Having spent many years dealing with the main sources of development finance, we will know which lender has the propensity to lend, and the person within that organisation that has the inclination to say “yes”, on the terms that you need.

Getting to a “yes” requires all of the above. However, the crucial ingredient has not been mentioned; the finance proposal. At proposal stage, the old maxim “it is not what you say, but how you say it”, applies critically here.

Two finance proposals for the same purpose, with the same basic fundamentals, may well have differing outcomes, based solely on the way that they are communicated to the decision maker. Our job here is to ensure that your property development proposal is communicated to the Bank in a way that ensures that the decision maker feels comfortable with the project and more importantly, your ability to manage it.

An incoherent proposal is never a good start.

Working closely with selected finance providers we are able to offer property development finance for all types of UK projects including residential and commercial. Finance packages are available for experienced developers and also those undertaking their first property development project.

Typically UK property development finance will be used for:

As with other commercial loans, property development loans will be secured against the land or property you wish to develop.

Who can borrow?
How do the products work?

Typically, loans are available over a twelve to eighteen month period in order to fund the land/building acquisition and the development costs. The loan is split onto two parts; up to 70- 75% of the undeveloped “site” acquisition and 70- 75% of the build costs, drawn down in stages.

The build costs can include, architects and other professional fee’s, your wages/drawings if you need them, a 15% contingency to cover cost/time overruns, and the interest payments on both loans rolled into the total facility.

The total potential loan should not exceed 65-70% of the developed value of the project. In effect, these loans take the form of a secured bridging facility, they are not “ term loans”, and are not assessed as such, unless your exit strategy is to retain the developed building, for say letting purposes. The lender will want to know your exit strategy at outset.

To discuss your property development finance requirement please use our commercial loan enquiry form or call us on 0800 316 5756

 

Please note that the FSA do not regulate commercial loans or commercial mortgages

 

GDV Funding


Those of you with a track record of delivery on time and budget may have access to what is know as “GDV” funding.

The way to understand this one is to take the gross developed value and work in reverse! An example would be a development with a developed value of £850,000, 70% would be the maximum total loan; with 70% of the land value being borrowed on day one. The difference could cover 100% of the build costs, including, fees.

This type of finance, by its very nature carries an increased risk for the lender, so expect to pay more interest and fees.

 

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