Finding the right lender for a property development project is always easier with an experienced broker in your corner. The Revolution Brokers team has years of experience in construction mortgages and can help with every aspect of planning and financing your development.
Here, we summarise the key lender criteria to understand before you apply and before you select a mortgage provider!
For bespoke assistance with negotiating competitive lending for any size of development, give the team a ring on 0330 304 3040, or email us at email@example.com.
How Does the Application Process Work for UK Development Finance?
Let's run through exactly how it works; from deciding to apply for funding to develop a property, through to work beginning!
- First up, you'll need to have at least an idea of budgets. It's essential to have an indication of how much your development will cost, what you'd expect to sell it for, and therefore how much profit is involved.
- Next, we'd recommend contacting the Revolution team to discuss. Our development finance experts will take a look at your calculations, ask any questions that we know a lender would ask, and start identifying the best sort of financing for your project.
- Once we've taken a look, we'll give you some estimates of what sort of interest rates and fees you can expect to pay in today's lending market. If you're happy that the indicative costs are viable and competitive, we can shoot over a written quote. That includes all the interest rates, fees, terms and a list of all the paperwork we'd need to proceed.
- If you decide to go ahead, we'll work with you on the application. Revolution Brokers creates a full report to accompany the application, pre-empting any queries or concerns we'd expect the lender to have.
- Provided the lender is happy, they'll usually ask to come for a site visit and to meet with you. This step is worthwhile, since it gives the lender a better idea of your plans, and allows them to get better involved with the project. Don't worry; we'll help organise this all!
- Following the site visit, the representative will report back to their teams, including the underwriters who are responsible for finalising terms and assessing the risk level. Once the approval goes through the underwriters, you'll get a formal lending offer - with details of what else will be needed, such as a property valuation and legal paperwork.
- A surveyor will need to visit the site to carry out a valuation. This can take a little while as they'll report both to you and the lender on what they think the property (or land) is worth now, what it will cost, and what you can expect to sell it for.
- When the valuation comes back, the application goes to the legal stages. That means giving the paperwork and offer to your solicitor, checking you understand all the clauses, and sending back a signed acceptance.
- That's it! Once all the signatures are received back, your facility will be live, and you will be able to draw down your first tranche of funding.
How Do Lenders Assess a Development Finance Application?
There are lots of different criteria that a lender will consider before they offer to lend. These can vary significantly between lenders, and between development projects, so the rules on what will and won't be accepted are not written in stone.
- ·How much you want to borrow. Most lenders will offer from £50,000 upwards.
- ·The length of the development project - typically anything from one month to three years.
- ·Security - the more security you can offer, the lower the risk of the loan. Having planning permission in place is also a good security factor.
- ·Your circumstances. Development finance lenders usually lend to private applicants, pension funds, limited and partnership businesses, and offshore companies.
- ·Your age - you must be over 18, although a Special Purpose Vehicle business can usually borrow without any trading history.
- ·Where the development is based; Revolution Brokers works with lenders across all UK countries.
- ·Your credit rating - provided you don't have a severely adverse credit history, your development finance approval will rely primarily on the viability of the project itself. However, bad credit might mean less competitive terms.
- ·The development project type; working with a whole-of-market broker such as Revolution means we'll match you with a lender for any build, from a complete new-build to a conversion.
- ·Whether you have planning permission - you can get development finance without it, but usually, it is easier to finance a project that has the approvals in place.
- ·Your exit strategy. The lender needs to know how you're going to pay back the loan (i.e. whether you expect to sell the development). They'll also verify the value of any repayment vehicle to ensure it's viable.
Expert Support with Development Finance Applications
If you're unsure about whether you can meet the standard lending criteria, or need personalised support with creating a successful development finance application, contact Revolution Brokers.
We work with all sorts of developers from experienced commercial clients to first-time private developers and are available on 0330 304 3040 or via email at firstname.lastname@example.org.