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Why Location Matters in Development Finance Applications

Development finance is widely used for refurbishment or renovation projects – but why does the property's location form such a big part of the mortgage assessment process?

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2024-07-17
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Why Location Matters in Development Finance Applications

Different lenders are available in each country within the UK.

So it is worth understanding the situation in your area depending on whether you are based in England, Scotland, Wales or Northern Ireland.

While some lenders offer development finance across Great Britain, others are location specific and prefer to accept projects within their localised area of expertise.

Others have restrictions on where they will lend, so you must work with an independent broker to decide which lenders are most appropriate for your development finance project.

For tailored support with regional development finance, contact the Revolution Brokers team on 0330 304 3040 or drop us an email at [email protected].

Development Finance in Scotland

Scottish planning and lending rules differ from those in England, although regional development providers offer competitive lending.

The critical criteria are to understand postcode restrictions and how these might impact your access to development finance.

For example, some lenders will not approve applications for developments in the Highlands or away from the mainland. Those that do can charge very high rates or have caps on the maximum loan to value ratio they can offer.

A lot depends on the risk profile of the project and your application circumstances.

If you are seeking development finance in Scotland, the best option is to seek support from an experienced broker who can guide you down the most favourable application routes.

For more information, contact the team on 0330 304 3040.

  • Loan details
  • help If the land was purchased within the last 2 years for less than the current land value, we will lend up to 65% of this figure
  • Initial Loan (day 1) must be less than 65% of Initial Land Value (day 1)
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  • The LTGDV is higher than 70%. Please review the Initial Loan (day 1), construction costs and gross development value fields.
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Can I Apply for Property Development Finance Lending in Scotland?

Although it can be trickier, you can find residential development finance in Scotland.

Development finance is most commonly used for commercial developments, but you might find that a residential development loan is a more cost-effective option than a self-build mortgage.

Before selecting the type of lending to apply for, contact the Revolution Brokers team to identify the pros and cons and weigh up the comparable products available on the market.

The right option for you will depend on your circumstances, and how closely you match the lending criteria, so two developments might have different funding solutions.

As we've mentioned, planning rules and development permissions vary considerably in some regions of Scotland.

While there are far more lenders offering to finance in major regions such as Edinburgh, Glasgow and Aberdeen, choosing the best development finance provider often requires assessing their eligibility criteria and whether they're likely to approve funding for your project.

Development Finance in Northern Ireland

There are fewer development finance lenders in Northern Ireland. Still, the Revolution Brokers team works with local lenders who do offer competitive rates.

Some UK lenders cover the Northern Ireland borders, although many stick to mainland UK regions.

Likewise, there aren't as many development finance lenders based within Northern Ireland as in the rest of the UK, but those local lenders may be happier to approve a development finance application since they're familiar with the planning rules and may have funded similar projects before.

Most commercial development finance applications are assessed on their individual merit, so your chances of approval depend on the circumstances and the development project.

Niche lenders will want to look at how viable the investment is and the risk level they would accept if they were to lend.

That means having a comprehensive application showcasing precisely what you plan to build, how much it will cost, and how you plan to repay the financing when your development project is complete.

Generally, development finance for Northern Irish projects requires a higher deposit, and you might find that interest rates are higher than in England. However, a robust application with professional support is the best way to help your broker negotiate competitive rates that will ensure your project remains profitable.

Hence, it is essential to work with an independent broker who can negotiate terms and rates on your behalf before accepting an offer.

Where Else Can I Apply for Property Development Finance?

Development finance is available throughout the UK and indeed for international development projects. Overseas lending is available through specialist providers.

Many high street lenders do not lend to international developments given the higher risk factor, although this type of lending is available through experienced brokers.

Expat development finance and borrowing for foreign nationals is very much a specialist product. It can be impossible to take out any home loan or development loan if you are a non-national or a British citizen living overseas.

There are niche lenders who finance property developments for expats or assist with investments in properties outside of the UK - please get in touch if you require this form of development finance.

What Eligibility Criteria do Development Finance Lenders Consider?

Before applying for development finance, you need to know the criteria of your selected lenders to ensure your application will be accepted.

Alternatively, you can work with a broker who will consult on what you wish to borrow and recommend the most appropriate lenders who match your requirements.

The most important criteria include:

  • Having a viable and tangible exit strategy. This requirement is how you will repay the short-term development finance, and most applicants plan to sell the development on completion or remortgage to pay back the development loan.
  • The level of deposit available. Most lenders can fund 100% of the development budget, but around 70-75% of the initial investment to purchase the land. You will need a deposit for the balance, and the higher the deposit available, the more favourable the rates you can expect.
  • Your credit score and history. If you have a clean credit record, you can apply to more lenders and get a better rate. However, if you have a low credit rating, development finance is still available through niche lenders.
  • Development experience. The more experience you have, the lower the risk to the lender, and the better your track record, the more lenders will look positively on your application.

The most important thing is to have a viable investment project and demonstrate with certainty that you will be able to raise funds to pay back the development finance loan.

Location is also a key factor and will determine which lenders to apply to.

Expert Advice on UK Development Finance Lenders

For tailored advice with development finance for UK or overseas projects, contact the mortgage brokers team on 0330 304 3040.

Alternatively, send an email to [email protected], and we will agree on a convenient time for one of our development finance experts to give you a call.

Our experienced team of independent consultants work with a wide range of clients, from large development organisations to individual investors and first-time developers.

Whichever part of the UK you wish to finance a development project, Revolution will assess your circumstances and make tailored recommendations to ensure your application has the highest chances of approval and is directed to the most suitable lenders for you.

Assessing the most competitive lenders, and which development finance providers are most likely to approve your loan is the first step in ensuring you secure financing for your development project.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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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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