Examples of development finance rates
At Hank Zarihs Associates, we are proud to secure highly attractive finance rates via our panel of specialist lenders, who trust us to package up project applications in a way that allows them to make a rapid assessment of each borrower’s specific needs. Development loans rates vary according to a variety of factors, such as the sum required, the duration it is needed, the experience of the borrower, the location of the project and the financial returns.
Example: As an example of a typical finance rate for a development loan, a residential finance deal could start from 3.95% APR and a commercial development loan could start from 7.50% APR. On a bridging loan, the interest rate ranges from 0.45% to 1.25% pcm, depending on the asset, the credit profile of the borrower and the LTV required.
For the latest interest rates available, please visit our rates here or contact one of our team on 0203 889 4403. Remember at Hank Zarihs Associates, we are able to access specialist development finance intermediary deals which aren’t available directly to customers!
A senior development loan is a typical type of property development finance, where the lender will take an initial first charge on the property or site being developed, and will then fund the Gross Development Value (say, to 65%) or the project costs (at 80%), with an interest provision applied. This means that interest payments do not need to be serviced monthly.
Senior Stretch loans
These development finance loans are ideal for developers who need to access larger amounts of finance for their projects. The name, senior stretch, describes the order of the loans. For example, a developer might get a 65% development finance loan, and then need a top-up mezzanine loan, which can be raised very quickly at a higher interest rate.
This type of loan combines the primary asset-based loan (made against the project) and the cash flow loan, which is designed to provide rapid access to top-up cash. As developers will know, this type of finance can often be very attractive in order to meet unexpected development costs at short-notice and to allow the project to be rapidly completed to progress to sale (and loan redemption upon that sale being realised).
What are development loans typically used for?
Development loans are usually used to provide short-term finance for residential (including HMO) or commercial property developments. These can be construction, conversion or refurbishment projects, and the finance can also be used to buy properties at auction.
These are specialist loans which are suitable for a range of developers – from builders who are renovating their first property, through to highly experienced developers who are building a series of complex projects. They can also be used by landlords and by homeowners to renovate owner-occupied properties.
However, because development loans are specialist products, it is well worth using a specialist intermediary to ensure all features of the products on offer are understood. This is particularly important for products such as bridging finance, which can become very expensive if used incorrectly.
Equally, by using an intermediary such as Hank Zarihs Associates, developers know that they will be receiving highly competitive deals tailored to their unique needs and that their projects are more likely to be accepted by ready lenders, thanks to our service and relationships.To learn more, check out Hank Zarihs Associates detailed article about how does development finance work.