Construction loan calculator
To help you get a better idea of what a construction loan entails, we’ve put together our handy and simple to use construction loan calculator so that you can get a better idea of what the costs may be and help you to plan your property development better.
Simply follow the straight forward steps and you’ll get a good illustration of what a construction loan would cost for your property development project.
Do I have to put a down payment for a construction loan?
With most construction finance the answer is yes. Most construction finance providers will expect you to put down a down payment of between 20% and 25% or enough to cover the cost of construction and the mortgage on the project.
This is because with this type of construction finance and the type of project they give funding to are, generally, much higher risk than a standard bank loan for example.
If you’ve got good experience in this field and you’re able to demonstrate a good track record in construction and development of this type of project then it increases your chances of approval as your risk profile lowers in that you’ve got demonstrable success in achieving this type of property development.
How does a construction loan work?
Construction loans work slightly different to a traditional loan in that the full amount isn’t paid up front or at the point of agreement.
Once construction loans are agreed they are released in what’s known as ‘draws’ which will be against an agreed schedule. In most construction loans the first draw will be your own funds, which works as a de facto deposit against your loan.
When you provide your construction plan to the loan provider they will want to see your project schedule in order to see when each stage will be completed, and they will then subsequently make an agreement of when to release the draws until the project is then completed and the loan can be repaid.
Is it difficult to get a construction loan?
Getting this type of loan, or construction loan, isn’t necessarily difficult but lenders do have quite strict criteria they’d like you to meet as this is quite a specialist type of loan.
With a construction loan the idea is to be able to demonstrate that you’ve planned everything in reliable detail and that you’ve got a good chance of completing the project on time and effectively repaying your loan on time. Due to the nature of this type of construction and project, it presents a high risk to the lender and, as such, means that they need to be sure about you before agreeing to your loan.
What we can offer, however, is some market leading advice with our specialist loan advisors who can tell you in much greater detail what you’ll need in order to qualify for this type of loan as a property development investor. Construction isn’t easy, but even if you have little experience there are other ways to provide lenders with confidence that you’re able to complete your project on time and repay your loan too.
Our advisors and brokers can help you to do that by helping you with things such as business plans and helping you to write a build schedule and helping you to understand how you’ll need to break down the construction and property development.
Commercial construction loans for self build projects
If you’re looking for commercial construction loans, these are also available if you’re planning a commercial construction and the development is right for the land that you’re planning on constructing the property on.
Just like a residential construction loan provider, the terms and conditions are broadly the same and, similarly, the rates aren’t hugely different either. A provider of commercial construction loans will be looking at your experience, how much security you’re able to provide and the team you’ve got around you, for example, in exactly the same way a residential construction loan provider would.
They’ll also want similarly detailed plans from you about a commercial construction, as these too are risky. They’ll want a full build plan and schedule for your commercial construction, and they’ll be seeking to release the funding in stages too, rather than releasing the full amount.
In many situations commercial construction can actually be less stressful, so it’s worth discussing the funding with one of our broker team who can get you across what you might need to provide in order to qualify for funding.
Speak to a construction finance advisor today
Our team have been built over years based on their experience, expertise, customer service and ability. We’re incredibly selective with our recruitment process and only have the best working in our team of experts and advisors.
We want our clients to feel like they’re speaking to the best in the business when they reach out to us so that they can have the confidence that they’re getting the very best advice, and that they’re getting a selection of the best products on the market too.
We’ve spent years in the business and we’ve funded millions over that time for our clients, from smaller projects requiring just a few thousand pounds, to huge construction projects requiring millions. Whether you’re a smaller or a larger developer it doesn’t matter to us, we’re here to talk you through the process and how to get the best.
We’ve spent a long time building our relationships with our panel of lenders and that means that they’ve got confidence in us to only come to them with applications that we know have a great chance of being accepted. When it comes to it our lenders know that we’ll have spent the time with our clients to ensure they’re ready.
We help clients from start to finish with their applications and always ensure they’ve got all the information they need. Whether you need help with a business plan, a build schedule or an exit strategy we know how to help you out and we know how to get things done.
We also appreciate that time is of the essence for our clients, and that they need access to funds quickly, which is why we’ll always ensure you’re getting things done as quickly as possible so that you’re able to get on with what you’re good at, and that’s developing properties. So why not get in touch today?