What is development finance?

In essence, development finance is a loan used to pay for the costs of building a development or the acquisition of property. Although developing real estate is never simple, obtaining financing for it doesn’t have to be.

What is development finance used for?

Development finance is a type of loan that may be used to either improve an existing facility or build a new one.

What are the benefits of development finance?

The following are some advantages of development finance:

  • Fast financial availability.
  • Loans to fill in project shortages.
  • Large-scale renovation initiatives.
  • Lengthened terms of the loan.
  • Adaptable terms for repayment.
  • Interest percentages.
  • Payback Times.
  • Avoid these pitfalls.

Will I have to pay exit costs if I finish my project ahead of schedule?

We aim to secure funding that incurs no exit fees.

Can I still get financing with a poor credit history?

Yes, funding is secured against the property value.

How much deposit do you need for development finance?

Generally speaking, lenders want a deposit of 20–30% of the entire project cost; however, this can change based on the lender and the particular project.

Will I have to make monthly payments?

No, the interest is rolled up throughout the agreed-upon term of the loan.

Will I be charged interest on the whole loan period even if I finish the project early?

You are only charged interest for the period you have the loan.

Do you take into account the profitability of my business when securing a loan?

No, the loan is secured against bricks and mortar only, i.e., the value of the property if it is empty.

Can I get 100% development finance?

Complete Development Experienced real estate developers with a track record of successfully completing projects of a similar size are usually eligible for financing. Securing this kind of funding could be difficult if you’re a novice developer or trying to fund a smaller project.

Do you provide loans on particular property types?

No. We lend on residential, semi-commercial, and commercial properties and land regardless of construction, type, or use.

How quickly can a loan be secured?

Development finance can be secured within a few days of receiving all documentation.

What additional documentation would I need to provide?

A feasibility study of your development would be required.

At what point can I move from a development finance loan to a commercial mortgage?

When the development can demonstrate a profit, i.e., increased value, or when it can provide a revenue stream, e.g., tenant rental payments.

Does self-build mean that I have to personally build the property?

No. It refers to an individual looking to build a property from the ground up and subsequently live in it.

Do I need a solicitor?

No. However, we recommend customers seek independent legal advice prior to completion.

What are the drawdowns?

These are staged payments made against work carried out on the property.

What are the usual drawdown stages in a project?

Drawdowns can vary from project to project.

Drawdowns are usually released as follows:

  • Land value: An initial drawdown against either the purchase cost or the value of the land (if already owned).
  • Initial costs include footing and foundation.
  • Wall plate, which is the basic external structure of the project.
  • Wind and water are tight, which primarily means the windows and the roof.
  • First fix: This includes plastering and the initial installation of the electrics.
  • 2nd fix: Complete the electrical work and any finishing work required, such as painting and decorating, landscaping, etc.

Who provides development finance?

By going through a broker like us we would place your case with the best suited development finance lender.

Are you regulated by the Financial Conduct Authority?

The FCA does not regulate all mortgages, such as buy-to-let and commercial. UK Property Finance Ltd. is authorised by the Financial Conduct Authority (FCA) under No. 667602.