| GDV | ___ |
| Initial Loan (day 1) | ___ |
| Total Loan Amount | ___ |
| LTGDV | ___ |
| Day 1 (LTV) | ___ |
| Margins at | ___ |
| Build Term (months) | ___ |
| Minimum Term (months) | ___ |
| Assumed arrangement fee @2% | ___ |
| Admin fee | ___ |
| Exit fee | ___ |
| Net Day 1 Advance (after deductions)* | ___ |
Development finance can be the best option for borrowing to build a new property or convert a unit - whether for residential or commercial use.
Revolution Brokers negotiates property development finance for a vast range of clients:
• Experienced property developers and building firms.
• Professional builders who construct their own properties on parcels of land and sell them at a profit.
• Developers who haven't built anything from scratch before.
• Self-build applicants who want to develop a primary residence.
Generally, you can borrow up to around 50% to 60% of the land cost or the property that you plan to convert. Lenders are far more likely to approve an application if the site has planning permission. In other cases, they will offer to lend, subject to approval being secured.
In terms of the build costs, provided the total budget is within 60% to 70% of the gross development value (GDV), applicants can borrow up to 100%.
Property development finance tends to run on a shorter term, usually between one and three years as a maximum. The lender will need to know how you plan to repay the debt after the period ends, generally selling the development or taking out longer-term refinancing.
There are several reasons a property development finance loan might be the optimal borrowing for your conversion or build project:
One of the few downsides is that the valuation will often take longer, given the unique nature of a development project. Rates are also dependent on the nature of the property and your experience in similar constructions or renovations.
Property development finance is a great way to secure the borrowing you need if the development site isn't eligible for other kinds of lending - for example, a derelict building that isn't a habitable property.
You can borrow as much as you need to, usually up to 100% of the construction costs.
However, note that bridging finance for developments is only a short-term borrowing project, intended to 'bridge' the time between your need to invest in purchase or development costs and the time when that property will be eligible for a longer-term mortgage.
Therefore, you must have a clear exit strategy to show your lender how you expect to repay the loan - typically by selling the property or refinancing onto a residential or commercial mortgage product.
Any borrowing product will have associated charges, and it's essential you know the total costs before signing an agreement. Some of the most common fee structures include:
If you're interested in property development finance and would like to compare the fees applicable on the most competitive lending products, please give the Revolution team a call at 0330 304 3040.
Other related costs to set up a property development finance agreement are:
This type of borrowing is tailored to each client but tends to follow the same process:
Once the project is finished, it will be revalued, and the property sold or refinanced to raise the capital to repay the loan.
Most property development finance loans accumulate monthly interest - hence it is preferable to repay the loan as soon as possible to reduce the overall cost of borrowing.
Usually, you won't need to make monthly payments, but the interest is rolled up, and the total balance becomes payable at the end of the term.
There are a few different structures:
The critical requirement is to demonstrate the feasibility and a sound exit strategy. Provided there is enough collateral to back up the borrowed amount and verify the costs; a lender will usually be happy to make an offer.
They will need to see:
If you're interested in comparing property development finance with other options or wish to check out the best rates currently available on the market, please call the mortgage advisors team on 0330 304 3040, or email us at info@revolutionbrokers.co.uk.
As an independent, whole-of-market broker specialising in commercial mortgage and development mortgages, we are on hand to ensure your deal is structured to offer the most advantageous terms and rates around.
It isn't compulsory but is advantageous. Some lenders will agree on a facility without planning permission but won't offer as high a loan against the value of the land. We can usually arrange a 50% loan against a land purchase for development if there isn't planning permission in place.
Yes, it can be done if you approach the right lender who is happy to support first-time developments. The key is to ensure your application demonstrates robust planning and budgeting and that your professional team has the right experience and qualifications.
You can indeed - lenders will consider a wide variety of projects, including PDR developments.
Unlike residential borrowing, development finance is primarily based on the value of the property. If the land and development are profitable and provide sufficient security for the loan, bad credit is less likely to be a problem.
Development finance is available to limited companies, but the lender will usually ask for personal guarantees from the directors.
There isn't a cap on property development finance, so that the only limiting factors will be the value of the land and the value of the build cost. The maximum you can borrow will be based on the profit available and how much cash you need to borrow versus how much it is expected to sell for or be valued when the development is complete.
Development finance isn't paid in one lump sum. You usually receive the first payment towards the land or property purchase cost and then draw down funding in stages as the development progresses.
Not if you don't wish to! Revolution regularly negotiates development finance with rolled up monthly interest. That means you don't need to budget for ongoing costs throughout the development. Instead, you can repay this along with the capital sum at the end of the term.
Remortgaging your home is a great way to release equity and raise finance for those home improvement jobs you've always wanted to do. Before applying, it's vital to work out how much equity you have in your property and ensure sufficient capacity to borrow the funds required for the renovation you have in mind. In today's article, t..
Do I Qualify for First-Time Buyer Status? Working out whether or not you are a first time buyer may seem obvious - but there are plenty of scenarios where your position isn't clear! Examples might include: New buyers who have inherited a property they rent out. Buy-to-let investors that have never purchased a residential hom..
Most homeowners know that remortgaging means switching a mortgage from an existing lender over to a new deal. However, the process isn't always obvious. If you're on a fixed-rate deal, you'll want to get ahead of the end of the term to avoid being shuffled onto a higher standard variable rate where your interest costs will undoubtedly ..
Finding a great mortgage as a first time buyer can feel like an uphill struggle, with a larger proportion of applicants being turned down than a year ago. Around 20% of first-time mortgage applicants are rejected, usually because of the lender risk associated with their loan. Today, Revolution Brokers explains the highest risk facto..
Investing in a rental property can be an excellent way to get onto the property ladder and earn an income. However, if you haven't owned a residence before, you might find that a mainstream bank will automatically turn you down for a buy to let mortgage. In today's guide, the Revolution Brokers team explains how you can become a ren..
Buying a home for the first time is a massive step - but the deposit is often a stumbling block for first-time buyers. It can take years to save a sufficient amount or be impossible, so there are several ways to approach the problem and get your foot onto the property ladder. From April 2021, the UK government launched the new mortg..
If you refer a friend for a mortgage or any
type of finance you’ll both receive £25
each when their new application
successfully completes.
We are proud
members of the:
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.
Revolution Brokers understands that mortgages can be complex and confusing!
Ask us any question you might have, and one of our skilled consultants will come back to you as quickly as possible.
