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How to Obtain Big Development Finance for Your Property Projects

How to Obtain Big Development Finance for Your Property Projects Uncategorized  property development finance mortgages commercial mortgages bridging loans big development finance

As great and convenient as property development projects can be, they can be quite a nuisance when you lack the funds. It’s exciting to be able to develop a property, especially considering the many ways you can do this. But without the necessary sum of money, it just becomes a dream that’s out of reach. 

If you intend to start developing a property, then you need to consider a way to obtain big development finance. How can you achieve it? Read on to find out. 

Is Your Project Going to be Extensive?

It depends – so before you ask for funding for your project, you need to consider several things. These include substantial refurbishment, light refurbishment, and ground-up development. If you take a look at these, you should be able to determine what kind of funding you need.

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Property Development Finance – What Are Your Options?

For financing a property development project, you have multiple options to help you out. Depending on your possibilities, you can use one of these methods and get all the cash that you need for your project. So, here are your alternatives:

Bridging Loans

Bridging loans are a popular option whenever it comes to buying a new property. And the good news is that you can take them even if you have bad credit, in some cases. Your credit score is not the decisive factor when you get such a loan, after all. However, you may not be so familiar with how they can be used for developing a property. 

A bridging loan represents an amount of cash that you can take out for a short-term period – it is offered to anyone in urgent need of funds for a house. As such, these give you access to money quickly, so that you can secure a property before anyone else does it. 

However, bridging loans can also be used as property development finance. For instance, they can be used for buying uninhabitable properties, an excellent thing for developers. They also let you fix a broken property chain and allow you to secure a new property even if you have another property that hasn’t sold yet. 

Securing planning permission is another reason to take out a bridging loan for your development project. The loan can give you the money you need for the purchase of a new site while you apply for planning consent. Meanwhile, it is a good option for the purchase of a new property that won’t be considered by High Street lenders. Bridging loans can be secured on any property, even land with planning, flats, unmortgageable and uninhabitable properties, commercial units and houses. It is different from traditional finance. 

If you need to bridge a funding gap while you are renovating or buying a new house, a bridge loan could help you again. This is when you have a property or project that you made an offer on, and you cannot delay its turnaround. And lastly, the bridge loan can also be a great opportunity while you wait for the completion of your High Street mortgage application. A High Street mortgage usually takes months, whereas a bridging loan is for the shorter term, respectively a few weeks and even days sometimes. 

For more on bridging loans click here https://bit.ly/2wBjXYb

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Second Charge Mortgages

Second Charge mortgages represent another great funding option when you have a property project in mind. They are also known as secured loans. You can take one of these from a lender using already existing equity in your property. These mortgages have a few benefits to take into consideration.
For example, if you want to borrow a Second Charge mortgage for your property project, you don’t have to be living on the property. That’s not a requirement. Also, they give you flexible funding uses, and they are another option when it comes to remortgaging to free-up funds.


Second Charge mortgage lenders are not that strict either, making it easier for you to have access to one of these funds. They allow diverse borrowers to get these loans. Even if you are self-employed, you may have access to such a mortgage.

Besides, Second Charge mortgages are quite fast as well. In case you run out of cash while developing your project, you don’t have to worry. From the moment you apply to the moment you receive your money, it’s all really fast.

For more on second charge bridging loans click here

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Property Development Finance

You have the option to use actual property development finance, which is what you need in this case. In general, this funding option is used by property developers who have some experience in the field. Different from traditional funding, this option is needed to work around big development projects. Simply put, it gives you the cash that you need for your building costs early on.


What’s even better is that you can take out the loan in stages, so that you always have the necessary money for materials in each part of the process. When it comes to offering you the money in the first place, there are a few things that lenders take into account. For example, they will look at your history as a developer, as well as your circumstances as a borrower. Aside from that, they will look at the project type, its strength, and valuations.


You need to understand a few things about this financing type before you take one. Lenders will usually offer you terms of about 12-24 months, depending on the situation. They will also look at how much experience you have as a developer. It doesn’t matter whether you’re a company or just a sole trader – they will not overlook your experience. If you are developing a particular project, they want to see if you had similar projects in the past. If you can prove your experience, they will be more likely to offer you the loan, as they are confident you will succeed with your plan. Therefore, make sure you have proof of past success with other similar buildings.


There may also be an interest rate with your loan, and you need to be prepared for that. The higher the amount required, the higher the interest rate can get. This is because lenders give you finance for up to 80% of your project. So, the higher your ratio will be, the more the interest rate will grow.


In general, the lender will calculate the worth of your property on the open market using the GDV, or Gross Development Value. For investors and developers, this has to be one of the most important metrics to take into account. For a lender, the standard is usually 60-65% with this metric.


Also, you can get different amounts for your loans, depending on the lender. Property development finance can be between £50,000 and £2.5m. It depends on how big the lender is. This is because some big lenders will only consider offering loans for projects of more significant value – High Street banks are such an example. If you have a smaller project, development finance is right for you.

For detailed explanation of Property Development read more

For more on big development finance click here

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How to Get Big Development Finance for Your Project?

Before you even think of applying for property development funding, you need to know how to do this. In other words, you need to prepare yourself. Here are some aspects that you should take into consideration:

Be Informed

When you apply for your development finance, the chances are that the lenders will ask you many questions. After all, they need to know whether granting you access to funds will be worth it or not. This is why you need to be able to present your project to the lenders. You should also have the ability to present the financial need in a good way. If the lender needs even more information, then you need to find ways to give them more details.

Estimate Development Costs

Before applying for big development finance, you must know how much you’ll need. If you don’t have your calculations ready, you risk getting an amount that is not enough for you or a sum that is too big and brings high interest.


Before you go to the lender and ask for big development finance, you should look at everything regarding the project and estimate how much money you will need. That being said, look at the labour, materials, and anything of the sort. When you’re done calculating the amount of money required, make sure that you add a 10-15% buffer on top.

Understand your gross development costs

Prove Your Credibility

If you want the lender to trust you, you will have to bring proof of your chances of success. That means that you need to show evidence that you’ll be able to accomplish what you’re planning with your property development project.


This can be done by either teaming up with someone who has a good track record or showing your own experience in the development field, as well as previous successes. Without any of these, getting a significant amount of cash from a lender is unlikely – and you won’t be able to fund your project as a result.

Make Plans for Multiple Locations

Considering that loans may not be processed immediately, there is always the risk of the property you want to be sold to someone else. This is why you need to think of multiple options and locations. This way, you’ll have higher chances of getting money for funding your development project. Of course, if you want to obtain your loan, you need to show proof of your plan and that the building is in a spot that has a good ROI.

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The Bottom Line 

When it comes to big development finance, you need to know your options, and how to increase your chances of obtaining a loan. It might take some time to find a lender willing to offer you the cash for your project – especially if you are unable to prove the success rate of your plan or if you don’t have much experience with similar projects. For this reason, you must be well-prepared before talking to the lenders.


Hopefully, this article has helped you in this regard. We wish you the best of luck for your project and make sure you choose the right development finance for you.

For more information on big development finance contact property finance partners. Call 020 33939277 or email [email protected]

How Does Development Finance Work?

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Development finance began to show a fair amount of potential as of late. Buying a property at a fairly low initial price and then developing it to be sold or lent at a higher price seems like a good investment for many people. It brings enough profit so that in the long run, you can recover the money you have invested in the initial purchase.

But still, do you understand exactly how this type of finance works? You may know a thing or two – but understanding the basics will make the difference between starting a successful business – and one that will leave you bankrupt.

What Does Development Finance Offer?

There are several types of finance options for development, each one targeting a certain kind of development. A smaller development, for instance, may involve a simple aesthetic renovation that has nothing to do with the structure of a property. This can be anything from a wall painting to a change in staircase rails, door knobs, and other similar items.

A lender, however, may also go for redevelopment finance – which is basically classic development finance that also handles the structure of a property. Those who want to apply for residential development are generally the ones who also need to dive into heavy work to the house structure.

In other words, if you are planning to extend the house or to rearrange the walls, you will have to apply for redevelopment finance. While this may be rather costly, it can also drastically increase the value of a property. On the long term, this may bring you a fair amount of profit.

Last but not least, property development finance will allow you to develop a building from scratch. Say that you have a piece of land, but you have nothing worthwhile on it. If you build an establishment there, then you’d be able to gain more profit by bringing in more tenants. In the long run, this will definitely prove to be a good investment.

However, bear in mind that a new project that is built from scratch can be quite costly – particularly if you don’t really know what to invest your money in.

It is recommended that you first contact a broker and ask for their advice before signing any contracts. In the long run, this might just save you pounds that reach the thousands.

Stratford Development BeforeStratford Development After
 How Does Development Finance Work? Development Finance  real estate development finance Property Loans property finance property development finance Development in London  How Does Development Finance Work? Development Finance  real estate development finance Property Loans property finance property development finance Development in London

How to Apply for Property Finance

While development finance may seem like a classical loan for a mortgage, it is not exactly so. On mortgages, for example, you pay your part every month – and as long as you are on time with your payments, no one really cares what you do with your home and who stays in it.

However, property development finance involves business loans. The lender will assess the value of the property – and then will make you an offer for a loan based on your eligibility, ability to pay, and potential for the development to be a success. When providing finance, lenders will try to predict the final value of the project – and how much the developer will have to pay in order to get to that stage.

To apply for finance, you will have to turn in an application that specifically says how much property you have – including its development costs, building timescale, and professional fees. Once the papers have been turned in, the lender will give you a list of terms that you will have to agree to. Once this stage has been cleared and you have reached a mutual consensus, you’ll be ready to advance to the credit check.

Bear in mind that depending on the state of your credit, you may receive different financing amounts – if any. If you have a bad credit rating, there’s a high chance that your application will be rejected. Bad credit can have a serious effect, so make sure that you have checked it beforehand – and that you fixed any potential errors that you might have on your report.

Last but not least, the loan may have been approved – but the lender will still be monitoring the borrower throughout the entire process. Furthermore, since the interest rate is determined based on the “risk factor,” it’s hard to say from the very beginning how much you will have to pay in interest fees.

You can find the top 10 tips for raising Development Finance

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The Paperwork Needed to Apply

When it comes to property development finance, the paperwork is a very important step that you need to take care of. Plus, you need to consider that the future value of this property is also taken into consideration – which is why you’ll have more paperwork to deal with than with the average mortgage.

Before talking with the lender, as a developer, you have to ensure that you have the following documentation at hand:

  • Evidence of the property’s value (if owned) or its purchase price (if not yet owned)
  • The predicted property value once development is over, along with evidence
  • Renovation and business costs
  • Time schedule for the development
  • A CV or portfolio that proves your experience and ability to finalize the project
  • Details of the personnel and individuals that are involved in the project
  • Data on the building regulations
  • Plan permissions (copy)
  • Copies of planning restriction that you may come across

Depending on the paperwork, the lender will decide whether the property is worthy of development finance or not. If you manage to prove that the property will have significant value by the end, then you will most likely receive the necessary financing.

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The Need for a Broker

When it comes to development financing, you don’t really need a broker – but still, it might not be a bad idea that you use one. When you are dealing with a lender, you might receive property development financing that is either too big or too small.

However, a broker will analyze your financing – and practically everything else – to ensure the lender acts in your best interest. This way, you won’t have the “nice” surprise of receiving an interest rate that is higher than your normal rates.

Plus, lenders have the tendency of sometimes hiding some things, or simply conveniently “forget” to mention them. A broker, however, will not only look for the best lender you can go for – but they will also provide you clarity regarding the costs of the loan.

They will basically explain to you what money goes where and why a certain fee is as high (or low) as it is. Brokers will also negotiate on your behalf so that you can get the best price – since they know the market and what to expect. Therefore, your finances will rise and you won’t have to overpay when it comes to fees. In the long run, this will prove to be a great investment.

So, as you can see, strictly speaking, a broker is not necessarily someone you’ll need when it comes to development finance. It is, however, someone who could help you get much better rates than you could by yourself.

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Property Development Finance FAQ

When it comes to financing for development, there will always be questions. Some have clear answers – others will depend on several different factors. Here are some common questions that might arise in this domain, along with their respective answers:

Q: What are the fees that I will be expected to pay?

A: Development finance associates itself with a fair assortment of fees, mostly depending on the lender and the documentation you bring to the table. Before signing any contracts, it’s always a good idea to sort them out so that you know exactly what to expect. In these cases, it’s always a good idea to consult with a broker, since they will give you a fairly clear picture.

Q: How much will I be able to borrow?

A: This will depend mostly on the expected development value associated with your project. If you have a smaller project, then you will be given enough finance to cover the costs. However, if the project is bigger, you may receive more financing – provided you meet your lender’s criteria.

Q: Can I get financing if I don’t have any experience in property development?

A: This will generally depend on the lender. Some of them have no problems with offering finance to someone with no previous experience. The only condition is to either conduct proper research or to have a team of professionals working with you.

However, most lenders prefer thYou can find the top 10 tips for raising Development Financeat you have a certain degree of experience. This way, you will be seen less as a risk factor and more as an investment. For this reason, you might want to conduct proper research before settling on a lender.

Final Thoughts

Property development finance may seem like something difficult to understand and receive – but as long as you learn the basics, you’ll find out that it’s not actually that difficult.

Lenders will look for promising investments that will get good rental income when the project is done. The more solid your plan is, the more finance options you will receive. Provided both parties (lender and borrower) make their terms clear, there should be no problems when you are applying for financing.

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