Development finance, also known as developer financing, is a type of property finance that provides funding for property developers through specialist loans.
These funds are raised specifically to help with the costs of residential or commercial development projects, from land acquisition to construction, renovation, or refurbishment.
We discussed how property developer finance works previously, but this time, we’re taking a look at the advantages of this type of financing – and how it could help you.
Developer finance can be used for a range of residential properties and commercial premises, whether it’s a new build from the ground up or the renovation or conversion of an existing property.
Available for mixed-use developments and older buildings, developer finance arrangements can also make it simpler to secure funding for more complex construction work.
With financing to cover contractor and material costs, often bridging gaps between development stages, developers can undertake more ambitious projects that may not have been viable otherwise – or even carry out multiple developments at the same time.
Providers and brokers of developer finance understand the varied challenges unique to the property development sector, possessing valuable insight and industry connections.
The development finance industry fosters collaborative processes between developers seeking funds and forward-thinking lenders, ensuring cost-effective procedures that achieve optimal outcomes in efficient ways and in alignment with market demands.
These relationships can be key in establishing networks that encourage long-term growth for developers, increasing the viability of more (possibly even larger-scale) projects in the future.
The main point of finance methods specially designed for property development is that they can be tailored to the individual needs of the developer and their project.
This means that regardless of which type of property you’re developing, or whether you have a long history in one area and want to move into another with a bolder venture, you should be able to find the right finance deal for your particular project requirements.
Typically, specialist lenders will work with developers to create a tailored contract that facilitates the completion of the project on schedule, while allowing the developer to maintain a reliable cash flow.
While traditional mortgage applications can take several weeks or even months to be processed, development finance can often be approved in several working days.
With funds available in as little as two weeks after valuation and approval, this rapid access to finance allows developers to progress with their projects as soon as possible. Streamlined schedules with expedited timelines can also take advantage of time-sensitive market opportunities.
Finding the right provider is essential in this respect, as an experienced lender will be able to secure a favourable loan while minimising the length of time between applying and completion.
Other than a deposit, if required, developers won’t need to pay upfront for a property development loan – freeing up their cash for use elsewhere instead of tying it down for months or years.
The short-term loan style utilises repayment structures that co-ordinate with the flow of the development, usually lasting for a period of 6 months to 24 months.
Interest ‘rolls up’ over this term – so, rather than being due monthly, the developer will repay the capital and interest at the end of the loan period. This leaves them free to focus on each stage of the project without the pressure of repaying debt before the completed property can be sold or leased.
There are a range of banks, independent lenders, investment companies, and various other specialists who can set up and/or supply finance for developers.
Each one will have their own set criteria and application process, but here at Architects Certificate, we pride ourselves on offering a speedy yet professional service. When you reach out to us, we will request the information we need and process your application as quickly as possible.
If you would like to benefit from our development finance services, including expert advice and flexible funding choices, be sure to fill out our developer financing form with your details, and we will get back to you shortly to discuss your options and provide a quote.
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