On High Street in Kensington W8 one of our clients required a bridging loan to convert 10 apartments. We were able to arrange a bridging loan of £9,500,000 with a rate of 6.9%. Our client used the funds to refurbish an existing property and split into 10 individual apartments before then arranging further long term finance and renting them out as a landlord.
Our client in Hadley Wood EN4 came to us to arrange a bridging loan to convert two properties, two houses, before arranging longer term finance with a mortgage. The client took out a bridging loan for £3,672,500 at a rate of 4.2%. Our client found a bridging finance provider after speaking to one of our brokers and agreeing terms with one of our experienced panel of lenders.
Our client in Ollerton NG22 wanted bridging finance to convert 12 apartments and went through our brokers to arrange a loan of £1,501,806 at a rate of 8.5%. Our client then went on to sell these apartments after completion, exiting and finishing his loan on time.
Development finance calculator
If you’ve seen a property development or opportunity that you like the look of then the most important first step is often the budgeting, and initial costings. You’re going to want to know what development finance will cost you and whether your property development is profitable, and for this we’ve included a quick finance calculator.
You can adjust the settings for different deposits, Loan To Value (LTV), interest and repayment length. This should allow you to see what a typical development finance agreement would cost in these circumstances, but please be aware any final quote or agreement would be subject to your circumstances, so if you’re looking for something more specific you should contact a broker.
Can you arrange residential property development finance?
Yes, absolutely. We arrange all types of property development finance, whether that be residential or commercial property development. We can also arrange development finance for a change of use either from commercial to residential or vice versa.
Our lenders are keen for exposure in the UK property market and will consider all types of property developments given you meet the basic criteria and are able to repay the loan. If you’re unsure then simply contact a broker today.
Benefits of a property development finance loan?
When you arrange a specialist property development loan, you’re arranging finance with a lender who understands the risks and demands involved in development.
The terms arranged mean that the funds are released to you in stages and is flexible depending on how the project is going, meaning if you need to you can exit the loan early, or arrange further finance if you require it.
Most development loan providers will assign you a contact or representative who will help you along the way with your development project, and it’s often much cheaper and more flexible than arranging a fixed term lending facility.
Bridging loans for property developers
Broadly speaking, we find that the vast majority of our clients that develop property prefer to go through a broker, or development finance broker for bridging loans or finance.
A bridging loan allows the flexibility, speed and support that traditional lending doesn’t, and allows developers the space to get things right before either selling on their investment or re-arranging longer term finance.
Do finance brokers charge a fee?
Yes, finance brokers will charge a fee, this is how they make money as they’re not the direct lender. Most will charge around 1% of the total amount of a loan, however, this may vary depending on the type of loan and the type of project you’re undertaking.
If it’s complex and more difficult to arrange, this fee may be slightly higher, but this is something any broker will make clear to you before any paperwork is signed.
How much can I borrow for property development?
This will depend, however, we find that as a minimum most of our lenders would look to lend £100,000, but we also have lenders who are willing to lend up to £100 million for the right project, so this is very much resting on the viability of your particular development project.
What are the key features of property development finance?
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).
Do I need to use a broker for development finance?
No, you don’t have to, as there are some lenders that will deal with you directly. We tend to find that our clients using us as a broker service because they get better rates and better access to specialist lenders who are experts in development finance.
It also takes away a lot of the work from the borrower, as they’re not having to comb through multiple providers to find the best deal, and they won’t have a dedicated broker assisting them with the application process, potentially slowing things down if they need fast access to cash.
Call us to speak to our property development finance brokers today
If development finance is something you’ve been considering then why not pick up the phone or drop us an email today and let one of our friendly team of brokers reach out and run you through the process and let you know what you might qualify for?
It takes no time at all and could put you in a better situation to see where you stand.