This type of development finance is aimed at experienced developers. You'd need an exceptional proposition to borrow 100% of a development budget if you've no track record of successful projects.

Lenders prefer to see either planning permission, or at least outline planning permission. Projects without planning are too high-risk for this type of loan.

Profit margins are also crucial, as a funding provider needs to be making a sufficient profit to mitigate the risk they are taking. Joint venture developments start at projects with a GDV (projected project valuation when complete) of at least £1 million.

If the profit margin is at least 30%, a lender is more likely to consider it.

You'll also very likely be asked for a personal guarantee, as an assurance that the provider will recoup the loan even in the worst-case scenario. This can often be capped at a particular value.

It is possible, but you'll usually need a significant level of security since you're applying for lending with zero deposit.

Most developers in this situation would need to offer other properties as security.

If you can't offer sufficient security, you'd need to provide a profit share.

The primary criteria are that:

• ·You have prior experience of property development and at least one project under your belt of a similar size.
• ·You can demonstrate a good profit margin, at least 20% but ideally over 30%.
• ·You have planning permission for your planned development work.
• ·You are applying for funding for a project with a GDV of £1 million-plus.

In most cases, the property is placed under the ownership of a specific type of limited company called a Special Purpose Vehicle (SPV).

The funding provider owns the company, although you have a guarantee that assures your stake.

The big plus is that you can develop a property without needing a deposit, or to release other capital to raise the funds you need.

Developers use this option to take on developments faster and thus raise the profits they are making.

Using an SPV in joint control with the lender to manage the ownership of the property also means you lower your legal fees.

Lenders will need to understand what the risk level is and consult their underwriters before they can make an offer.

The critical criteria are:

• ·Your experience as a developer.
• ·How much profit is projected. Lenders will want to see at least a 30% profit margin, but also a significant value, with projects starting at £1 million GDV.
• ·The exit strategy - how you expect to repay the loan. This becomes critical with large scale builds, as you'll need to demonstrate demand, and be confident that the units will be sold relatively quickly to pay back the borrowing.

Usually, you will need the below information:

• A CV showing your development experience.
• The schedule of work and expected costs.
• Copies of the planning permission.
• Valuations or estimates of the eventual sale value.

The best thing you can do is to provide detailed, thorough information that shows the lender that you're a less risky applicant.

That could mean researching local property prices, planning the work carefully, and identifying ways to make the project more appealing from a profitability perspective.

Commercial Development Finance

Our next category is commercial development finance; aimed at businesses and developers looking to construct commercial premises.

Residential projects tend to be less risky, and so you'll need to work with an experienced broker to source competitive lending.

Here are the steps to securing a commercial property development loan:

1. 1.Work out all the costs, budgets and expected profits.
2. 2.Contact the Revolution team on 0330 304 3040 for independent advice about the best strategy to proceed with your application.
3. 3.Our experts will indicate costs, rates and terms, and send that to you in writing to review.
4. 4.If you'd like to proceed, we'll work with you to collate all the required documentation and submit that to the lender with our report.
5. 5.The lender will usually then request a site visit and meeting to get to understand the project better and ask any questions.
6. 6.The next stage is for the lender to go through the underwriting process, and come back with a formal offer.
7. 7.Next, the property will need to be valued by a surveyor, including projected development costs.
8. 8.Finally, the paperwork is passed on to solicitors, signatures collected, and any outstanding documentation provided.

There isn't any cap, as such, but the lender will consider how much the site is worth, how much the development is going to cost, and how much it will be worth on completion. These figures all help arrive at a maximum lending offer.

In most cases, providers will lend up to 55-65% of the purchase cost, and up to 60-65% of the total GDV - i.e. what the project will be worth once the development has finished.

The monthly interest is typically rolled up into the loan. That means you don't need to make repayments until the development is complete, and will repay the full balance once the property is sold or refinanced.

Revolution Brokers works with a vast network of lenders, providing commercial development finance for any number of property types. These include:

• Commercial builds, including office blocks and industrial properties.
• Developing land into a commercial property.
• Renovating or refurbishing premises.
• Conversions from commercial to residential or visa versa.
• Building on agricultural land.

Mezzanine Finance

Our next product is mezzanine development finance; this is a bridging loan that covers the difference between the deposit you can put down, and the maximum your lender can offer.

Mezzanine lenders usually take a second charge over the property to secure their lending.

Developers use mezzanine finance to be able to take on large-scale developments and maximise their investment returns, without needing to release capital to raise a larger deposit.

The typical criteria are as below:

• ·Maximum of 90% loan to cost ratio.
• ·Short-term lending from six months, up to two years.
• ·Experience in similar property developments.
• ·Planning permission secured.

Revolution Brokers lenders usually start at loans of £250,000, without any particular limit. Most lenders will offer up to 90% of the project costs, provided all criteria are met.

Costs depend very much on the individual project, and the Revolution team provides bespoke advice and negotiations to every mezzanine funding client.

Interest can be anything from 1% per month and upwards. There are significant risks to offering mezzanine finance, and so the lender will consider the following factors before they make an offer:

• What deposit you have available.
• The viability of the eventual sale.
• Where your development is based.
• How much you need to borrow.

It can be - you need to understand that you're borrowing from multiple lenders against the same development project, and each loan will carry interest charges.

Mezzanine finance applicants are personally liable, even if you're applying through a business. As such, if the development falls through or the property doesn't sell, you could be risking personal assets.

If you apply through a company, you will be asked for a personal guarantee as security and a risk-aversion measure.

Regulated Development Finance

Now we'll consider regulated development finance; where you're looking for lending to build or renovate your own residential property.

The regulated part of the product refers to the proportion of the property that is being used as a home; if that is over 40%, it becomes a regulated product.

This type of finance is most relevant when a person buys a plot of land to build a property, or wants to develop a new residence in an existing garden space.

There are lots of reasons you might decide to build your own property - and the benefits of regulated development finance, as well as the critical lending criteria, are below:

Benefits:

• ·Borrowing capital to build your own bespoke home.
• ·Highly competitive interest rates.
• ·Loans start at £50,000 with no upper limit.
• ·You do not require previous experience.
• ·Lending can last up to two years.
• ·There are no monthly repayments, with interest rolled up with the capital.
• ·You can borrow up to 100% of the costs of the building project.

Criteria:

• ·You will need to offer a realistic exit strategy such as a remortgage.
• ·If you have adverse credit, you'll need to work with a specialist broker who can negotiate terms with a niche bad credit lender.

No, there's no maximum, but loans start at £50,000. The maximum depends on what the land is worth, and how much the property will be valued at when it's finished.