Becoming a First-Time Property Developer without a Deposit
These days, 100% mortgages are much less common, although it is possible to purchase a property even if you don't have a deposit and are a first-time property developer.
Most lenders will require a minimum deposit as a standard term of borrowing. However, if you don't have a deposit, there are options, which are usually only available through an experienced broker, who will negotiate directly with lenders on your behalf!
Here we'll explain some of the potential options for a first-time property developer to buy a development property with no deposit and the pros and cons of each.
Choosing to invest in property development without a deposit isn't always easy, but with the right advice and support, there are ways to find first-time property developer lending to support your development aspirations.
If you require independent advice about investing in a development property as a first-time property developer - give us a call on 0330 304 3040 or email [email protected], and the mortgage advisors team will be happy to help.
Can a Development Finance Broker Help Me Invest in a Development Property by Releasing Equity from my Home?
You can, and this is an excellent option if you have significant equity in your property but no cash savings.
A remortgage or secured loan is usually low cost for a first-time property developer and can quickly raise finances to invest in a new development.
Remortgaging typically only takes a few weeks, and you'll be able to borrow the funds you need to invest in your development project with a relatively low-interest cost compared to any other kind of unsecured borrowing!
However, it would help if you thought about:
- In the worst-case scenario, if the development doesn't sell for a profit, you'll still have a loan to repay that is secured against your home.
- You are financing the development entirely through borrowing, so you need to be sure that you will repay that debt.
Any first-time property developer financing secured against your residence comes with a risk that something won't go to plan. That means you'll still owe the same repayments against your home because the loan isn't linked to the development and won't change if the project falls through.
Lenders considering a remortgage application will also need to go through the usual affordability and eligibility checks.
Suppose you are a landlord or property investor rather than a first-time property developer. In that case, you can also remortgage or take out a secured loan against other portfolio properties to raise the capital you need, so equity financing for a property development doesn't exclusively have to be against your private residential home.
However, the same risks apply, so you must seek independent professional advice before leveraging a property asset as security against a new development.
2023-05-09 
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