Although you might find that some lenders use different terminology, housing development finance is pretty much an identical product to property development finance.

That can differentiate residential development finance from commercial projects or may relate specifically to new-build residences, usually built as part of a local housing plan to address a need.

Property development is a broad term and can relate to a vast number of projects, such as:

• Renovating a private residence.
• Building new commercial buildings.
• Repurposing old industrial units - into residences or new commercial properties.
• Constructing a self-build or building a new home on an existing parcel of land.
• Refurbishing listed properties.

Given this considerable scope, housing development finance isn't a different type of loan. Still, it is a development finance product designed for housing, rather than anything commercial such as a hotel, retail unit or another business site.

As a developer, your interest rates are substantially important!

Pay too much, and you might find that the expense eats into your profit margin. In some cases, the housing market could change during development, and so if you find yourself needing to sell at less than expected, the cost of your financing could mean you struggle to break even.

Therefore, it's essential to ensure you work with an experienced, independent broker.

We work as advocates for our clients, with access to our complete whole-of-market network of lenders, including broker-exclusives and niche development finance providers that don't deal directly with the public.

You can also look at several steps to improve your chances of being quoted highly competitive development finance rates:

• Research lenders through your broker to ensure you apply to the most suited provider and meet all of their eligibility criteria.
• Provide a higher deposit to mitigate the lender's risk and lower the Loan to Value ratio you're applying for.
• Put together a comprehensive application with full designs, plans and technical drawings to demonstrate what you're hoping to achieve.
• Deliver a clear, tangible exit strategy with supporting documentation. If you plan to sell the development to pay back the loan, that means researching sale prices for comparable properties to demonstrate why you are estimating the anticipated sale price. For remortgages, an agreement in principle is a great way to submit a solid exit strategy.

If you need any support with constructing your development finance application to help access the best borrowing rates, please give us a call, and we'll provide tailored advice to strengthen your documentation.

Property development finance is only ever intended to be a short-term loan. The interest rates are higher than on a conventional mortgage, and you'll need to explain how you expect to repay the capital borrowed when the term ends.

Here are a few example exit strategies:

• You're renovating a private home and will remortgage once the work is complete and your property is worth more. A projected valuation or mortgage offer in principle, will back this up.
• You're building a new property and plan to sell it. Valuations for other similar projects, recorded sale prices achieved, or an estimated value based on your plans will all showcase that you're realistic about the potential sale price.
• You're converting an old commercial property into residential flats and plan to keep the residence and rent out the units when it's ready. Estimates on rental income and a buy-to-let mortgage agreement will support this exit strategy.

The lender needs an assurance that you will be able to repay their loan, hence the need for a strategy to show them how you expect to repay.

It's also better to repay development finance sooner rather than later if you can because the costs are higher than other property loans.

Therefore, you could blend your exit strategies - so remortgaging on a residential, commercial or buy-to-let mortgage as soon as the building work is complete, with a view to selling it on when market conditions are optimal.

Note that a lender won't approve any development finance application without an exit strategy, so this isn't a decision you can make later on when work has already started.

Property development finance can be an excellent way of raising funds for projects that wouldn't be eligible for a standard mortgage product.

Although rates are a little higher, it's also more stable and affordable than a short-term loan or unsecured debt since a physical asset is secured against the loan amount.

Before making any long-term financial decisions, we'd recommend you seek professional, independent advice from the Revolution team. We ensure that any product you apply for is of good value and represents an advantageous borrowing route that will offer you the opportunity to finance your development without paying unnecessary charges.

For support at any stage of your development finance application, please give us a call on 0330 304 3040, or drop an email to the Revolution team at info@revolutionbrokers.co.uk.