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Development Financing Explained

Development Financing Explained

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Development finance is a form of lending that runs on a short-term basis and provides investment funds to build projects such as:

  • Apartments, and flats.
  • Commercial premises.
  • Land investments.
  • Office blocks.
  • Residential conversions.
  • Residential housing.
  • Retail premises.

Here, the Revolution team runs through what development financing means, what projects it is most suitable for, and how repayments work.

There are multiple ways to finance refurbishments, conversions and new-builds, and a lot depends on the size and purpose of the development.

For more advice with finding competitive development finance, or understanding the most suitable financing for your needs, give us a call on 0330 304 3040 or email at info@revolutionbrokers.co.uk.

The following topics are covered below:

How Does Property Development Finance Work?

How Do I Apply for a Property Development Mortgage?

Three Stages of Applying for Development Financing:

How Does Property Development Finance Work?

Development finance is usually short-term and paid on an interest-only basis. Most applicants will be:

  • Property developers, or
  • Builders constructing their own property, or
  • Self-build applicants with no professional experience.

This sort of loan is released in tranches, at pre-agreed stages of the build. Most lenders will require a site visit at each stage before releasing the funding.

In most cases, you can borrow around 70-75% of the value of the site investment and up to 100% of the cost of the build.

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How Do I Apply for a Property Development Mortgage?

The best way to have your development finance application approved is to demonstrate that the development is viable, and you have a solid exit strategy to be able to pay back the loan.

In many cases, the exit strategy is to sell the development on completion, or remortgage once the construction is finished.

Other criteria include:

  • How much experience you have in the property development sector.
  • Your credit rating and credit score.
  • How much deposit you have available to put down.

Three Stages of Applying for Development Financing:

  1. Contact Revolution Finance Brokers on 0330 304 3040 or send an email to info@revolutionbrokers.co.uk. We will arrange a time for a chat with one of our development finance specialists.
  2. Your advisor will recommend the most suitable form of lending, and give you an indication as to what they expect you will be able to borrow.
  3. If you decide to proceed, they will scour the UK lending market, to create a short-list of lenders and products that match your profile.

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FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature. We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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