Development Finance Project Types

Developers can use development finance for almost any construction project, whether the project is a modest renovation or a major development finance broker. Different project types impact on how the property development funding is set up. Here are some of the most typical:.

New Build Developments

New build projects mean building a property from scratch (this could be one residential property or a bigger development of housing). New builds tend to need more funding and more detailed costs planning as lenders will want to understand timeframes, experience and the expected GDV.

Property Conversions

Conversions refer to altering an existing property's use, for example converting a commercial building to residential units. These types of schemes can be very attractive, providing excellent value-add potential but you should expect high levels of scrutiny from lenders regarding planning permission and conversion works.

Heavy Refurbishments

Large refurbishment works may also involve deeper internal reorganisation, structural alteration or even extension, but they will often be cheaper to carry out than a new-build. However, such work requires additional cost control and programming consideration.

Mixed-Use Developments

A mixed-use scheme involves having a mix of property types within one project, for example flats or apartments above commercial spaces. Mixed-use schemes may be more challenging to finance due to the multiple income streams and multiple valuations.

Commercial Developments

Commercial developments are usually offices, warehouses, retail units and industrial buildings. These types of developments are often valued on both current worth and also potential income depending on what the exit strategy is.

Different project types carry varying degrees of risk and complexity and have differing funding structures. As a broker, familiarising yourself with these differences will enable you to structure the right deal from the beginning for your client.

Open vs. Closed Bridging Loan UK | What's The difference?

Bridging Loan property The most major difference between an open or closed bridging loans UK is the purpose of the exit plan. 

While both are short term funding options, open bridging loans UK do not have a clear plan in place for how the money will be returned (and can have an impractically lengthy time frame). 

One way this could be the case is, for example, an individual who intends to sell a property to pay back their bridging loan, but has not set a concrete date or purchase date. Conversely, with closed bridging loans the plan to return the funds is clearly laid out from the start. The lender can easily see how they will be paid back whether it's via inheritance, sale etc.

Finding the right type of finance is essential to any property investment or development.

Whether you are looking to purchase a commercial property or fund a new build, or need short term cash flow support, finding the right commercial mortgage broker can make a real difference. A professional independent mortgage broker can offer access to a panel of lenders outside of the high-street banks.

An independent professional will be able to source tailored finance solutions for investors, landlords and developers depending on the size of the project, risk and future objectives.

The type of commercial mortgage that is suitable for one business or investor will be unsuitable for another and will all depend on the particular circumstances, projects, and budgets. For offices, retail units and mixed-use developments, commercial mortgages require specialist knowledge and a good range of lender connections. For property developers, property development finance is usually needed to finance the purchase of land or property, construction and the eventual sale or management of the scheme. A professional development finance broker will understand how lenders view feasibility and planning status, exit strategies and projections of cash flow.

This knowledge will help guide clients smoothly through the often complex application process to secure the most appropriate funding.

For projects where speed and flexibility are needed, Bridging Loans London finance options are often the solution. Bridging finance loans can provide a short term solution for auction purchases, chain breaks or refurbishment projects or to refinance a property until a long-term solution can be sourced. Bridging loans are intended to be quick to complete with many providers offering in a matter of weeks.

When you work with a broker you will receive clear and transparent advice. The funding landscape can be complex so a broker will help clients clarify the most appropriate options for their particular needs. With the right knowledge, transparency and experience in commercial mortgages, development finance and bridging loans, you can streamline the application process, minimize delays and ensure your property finance is right for you.

Property Development Finance | How to Prepare a good Funding Pack

 When applying for property development finance, a funding pack that brings confidence to lenders is a crucial step in getting approval for funding. Lenders will look at not just whether the scheme is viable financially, but how the developer is going to manage the scheme from start to finish.

It is important to give a thorough overview of the scheme, including the location, type of property development, number of units and end value. Project costs also need to be broken down into land, construction costs, professional fees and contingencies, with realistic calculations to show the scheme has been thought out thoroughly.

Developers should ensure they detail their exit strategy – which will influence the terms of the borrowing as well as whether the lender looks at it as a loan or as development finance for property development schemes. Whether the project is sold, refinanced or retains long-term income will impact on the lending approach so this must be outlined.

Accurate projections for any financial scheme are also important, with cash flow forecasts, profit margins and loan to cost ratios all helping lenders to understand the scheme better. Evidence of market demand will also help them to assess the confidence of the scheme, such as rentals or comparable sales data.

Open vs. Closed Bridging Loans UK | What’s The difference?

Bridging Loan real estate The single biggest difference between an open or closed bridging loans UK is in your exit strategy. 

Although both are used for short term lending, open bridging loans don’t have a proven repayment strategy in place and only have a set time for repayment (which may be very broad in practice.) 

An example of this could be someone hoping to sell a house in order to repay their bridging loan, but haven’t got a firm date in mind or an already agreed buyer in mind. On the flip side, with closed bridging loans the exact way the loan will be repaid is determined from the beginning. The lender can clearly see a strategy for getting their money back, whether it is via the sale of property, inheritance etc.

Why an Independent Mortgage Broker is Worth it

That is where an independent mortgage broker really comes into their own. Here are five obvious reasons an independent mortgage broker is worth it:

1. Obtain Honest Mortgage Advice

One of the biggest advantages of using an independent mortgage broker is that they are completely independent institutions and will not have any vested interest in recommending the offerings of a particular lender or bank. Though the high street banks and building societies can only recommend their own products, no matter whether they are well suited to your situation or not.

An independent broker will compare a range of mortgage products from different lenders and recommend the most appropriate product for you according to your personal needs and circumstances rather than the other way around.

2. Secure Personal Advice from an Expert

Online comparison tools are able to compare interest rates and fees across all lender's products, but they cannot tell you how this kind of mortgage will work out for you financially in the long term.

A good mortgage broker will take the time to understand your individual requirements and be able to explain the benefits and drawbacks of each mortgage product in plain terms. You won't need to spend hours trawling through dozens of products; your broker will have already done this for you.

3. Gain Access to Mortgage Deals Not Marketed to the Public

Some products are only available to the public via mortgage brokers. Many lenders have specialist products that are not marketed directly to consumers, but are only accessible through an intermediary.

Using an independent mortgage broker will mean that you gain access to these exclusive broker-only products and all the wider choice of competition that comes with it. This can result in you being able to secure a more competitive mortgage rate than if you did it yourself.

4. Secure Support for Every Step of the Mortgage Process

Obtaining a mortgage is not simply a case of completing a form. There are documents to be assembled, affordability tests to be passed and various criteria to be met.

An independent mortgage broker will be there for you from your application to approval, helping you to gather the relevant documents, ask questions, liaise with the bank or building society on your behalf and check that everything arrives on time. They will smooth the smooth path to approval.

5. Get a Better Chance of Having Your Mortgage Approved

Getting a mortgage application is not something that you should take lightly. Getting a lot of rejections can seriously hurt your chances with future applications, especially if you’re applying to a lot of jobs in a short amount of time.

Your mortgage broker will review your credit profile and find the right lender for you. They will be able to find a mortgage product suitable for your financial situation and fill out a correct and complete application. This gives you the best chance of being approved the first time you apply.

Here is how a commercial mortgage broker can help you obtain finance for property development andBridging loans in London

In today's fast moving property market especially in the United Kingdom your chances of succeeding will depend a great deal on your ability to secure adequate finance; and for a number of reasons if your a investor dealing with a commercial mortgage broker in London will make this experience much less daunting. A commercial mortgage broker will help you source the right financial package from those specialist lenders who lend specifically to businesses; these loans may cover for a variety of property which might include shop and retail outlets, warehousing solutions, the commercial mortgage can cover any type of commercial property and any situation. By drawing from their vast experience within the banking industry these brokers have a wide portfolio of clients which include banks, private lenders and special funds making a broker much more likely to get you competitive funding.

If you are a property developer funding will be crucial, property development finance as it is now commonly called is a type of loan that will cover the entire project from buying land to construction stages right through to all finishing stages and until you eventually sell the property or refinance it onto conventional or non conventional mortgage product, unlike normal mortgages development funding is not about personal income but rather the potential end value of the development at all stages of the build or refurbishment project, a specialist broker can organize bespoke amounts which can range from £250k to as high as a few millions if needed.

When speed is of the essence time is the all important factor, and so a bridging loan can be raised for a variety of reasons; to bridge the gap between purchasing the existing property and selling the current home, to borrow money until long term mortgage plans are put in place, and of course commercial Bridging loans can be utilized when time is a serious limitation i.e. Purchasing property at auction and completion required relatively swiftly from exchange of contracts, for an urgent purchase these bridging loans in London can be completed in a matter of weeks, if not days, they can also assist with the cost of renovation and construction work.

When you want to take a proactive stance within the property market you have to make use of available specialist skills, thus allowing you to invest in a competitive market where flexibility and the correct funding are paramount to your success as property developers.