There are several reasons a property development finance loan might be the optimal borrowing for your conversion or build project:

• Many lenders will accept early repayments without charging a penalty.
• Inexperienced or first-time developers are eligible to apply provided they can provide contact details with a building contractor.
• Loan values start from £25,000 and above.
• Staged payments are aligned with critical points in the development, and interest is only charged on the amount of the facility drawdown to date.
• Other properties or assets can be used as security against the loan.
• If the development goes above or below the planned budget, there is no requirement to borrow the total amount agreed.

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:

• Arrangement fees or facility fees, usually calculated as a fixed percentage of the total loan value.
• Interest - charged monthly or annually. Typical rates tend to be around 7% per annum, with monthly charges of 1%. The longer the term, the lower the interest rate but overall larger the interest cost.
• Exit fees are not always payable but can be charged as a completion fee, generally calculated as a percentage of the finished development's value.
• Brokers fees - many lending products roll up broker charges into the loan agreement to avoid needing to make additional one-off remittances.

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:

• Valuation costs through an independent surveyor to identify the security value before the lender makes a formal offer and again when the project finishes.
• Legal charges if required.
• Monitoring fees, payable for inspection visits at critical stages of the build.
• Drawdown fees - usually charged each time you access a new tranche of funding.

This type of borrowing is tailored to each client but tends to follow the same process:

1. Contact Revolution to discuss your borrowing needs and the details of the project.
2. Our team analyses the market to identify the most appealing deals available.
3. The lender issues an agreement in principle and then organises a site visit.
4. Once the visit is complete, the valuation is prepared to confirm the property’s value.
5. Provided this covers the loan value, the lender makes a formal offer to lend.
6. At this stage, any legal work can proceed.
7. Next, the first payment is drawn, and this continues at stages throughout the development.

Once the project is finished, it will be revalued, and the property sold or refinanced to raise the capital to repay the loan.