Planning a Property Investment? Find the Right Commercial Mortgage Support

Investing in commercial property can be a great opportunity for business owners and property investors. Understanding your options when looking for the correct finance to secure your investment is key. Whether you're looking to buy new office space, retail space or warehouse space or simply increase your property portfolio, knowing your mortgage options will help you make informed decisions.

Working with a professional commercial mortgage broker will help you find the correct finance for your investment. By helping you compare lenders, interest rates, deposits and repayment terms, you'll have expert advice which will help you choose the right financing option.

All commercial property investments will require different forms of funding. Depending on what type of property you're investing in, how much rental income you have, how large your loan is, your business performance and your investment goals there will be different options available. It's important to compare the different mortgage options available.

Your commercial mortgage broker will help you understand what the lenders are looking for, prepare the required documents and make sure you're aware of the application process. Knowing you have professional help will make the process easier.

Silver Oak Capital can help property investors and business owners by providing a wide range of lenders to choose from. We can guide you through the whole process so you have a better understanding of your options.

Choosing the correct mortgage support will help you achieve your property goals.

Is Your Property Development Ready for the Right Finance?

The development of property projects might serve as an excellent tool towards achieving success in property development. Whether it’s residential development, conversion, or improvement of properties, you need to have your finances sorted and a plan set.

Through familiarizing yourself with the available options on the market for your property development, you can be sure of making wise decisions concerning finances. Taking your potential into account alongside your costs, you can create a realistic repayment plan to ensure you are confident with your finances.

What is Property Development Finance?

Property development finance is a specific type of finance to help fund property, major improvements and developments. Unlike a mortgage which will typically fund an existing property, development finance will be based on how much you expect to spend and when you expect to complete your project.

Typically lenders will request:

• Purchase price of property/land

• Costs of development and improvements

• Gross Development Value (GDV)

• Planning Permissions and approval

• Experience of the developer and how much they will be investing

• Repayment plan

Depending on your facility, you may receive staged payments to help fund different parts of your development.

What Makes a Strong Development Project?

Creating a detailed plan can help you show lenders that your project will be profitable. Prior to consulting lenders, one must keep in mind the following:

1. Prepare a Comprehensive Budget

An effective budget should involve:

• Price of purchase
• Development expenses
• Fees for professionals
• Insurance
• Legal expenses
• Financial costs

It would also help to include a backup plan to cover any unforeseen expenses. For example, unexpected delays, increase in material costs and unknown structural issues.

This gives you a clear insight into what you require to fund your development.

2. Know the Potential of the Property

Where and what condition the property is in can help determine how much potential it has.

Research the local area to see if there is demand for properties, what similar properties have sold for, rental opportunities and any planning restrictions. An independent valuation can help ensure your anticipated GDV is realistic.

3. Understand the Finance Options

Some development loans will be for the initial purchase of the property and then staged payments for the development itself.

The lender may require a monitoring surveyor to check on progress before they release further funds. You should create a detailed schedule for your development and keep in contact with your contractors.

By knowing what finance you’re going to receive you can avoid any cash flow issues.

When Can Bridging Finance Help with Development?

Not all property projects require the same type of finance. Some will require quick funding such as auction purchases, securing the property before someone else and short completion periods.

Mortgage bridging loans may be an option.

Bridging finance is typically used for short-term needs. This can help investors secure a property quickly or whilst they get their longer-term finance in place.

However, bridging finance is very different to development finance. Bridging loans are typically used for short-term property deals whereas development finance can give staged payments for your development.

Depending on the condition of the property, your development plans, how much you require and how you plan to repay, you can choose the right option.

Key Costs to Know

It is important to know how much money you will be borrowing.

Depending on your lender and facility you may have:

• Arrangement Fee

• Interest

• Valuation & Monitoring Surveyor Fees

• Legal & Administration Costs

• Exit Fees

• Extra costs for extensions and delays.

Your interest may be paid during the term of your loan, or added to the outstanding balance.

You should look to understand how much you are borrowing in total. A detailed look through your loan agreement can help you understand any extra costs.

Why Is an Exit Strategy Important?

When doing property development finance, it is important to have a defined exit strategy.

Lenders typically want to know how you will repay your loan at the correct point in your project. This can be done by selling your development or refinancing onto a longer-term mortgage.

For example, if you are developing residential apartments you may plan to sell them to repay your development facility. Alternatively, if you plan to keep the properties as rentals, you may wish to refinance.

Your exit strategy should be based on realistic assumptions around the value of your property, demand and how quickly you can sell or refinance.

You should also consider alternative repaying options.

How Can I Choose the Right Finance Option?

Taking proper account of your development objectives and finances leads to the best finance selection. The steps to follow before making a choice are the following:

• Evaluate comparison of finance options and overall cost of the loan.

• Identify the lender's requirements.

• Think about how much finance will be borrowed.

• Look at the repayment terms and exit strategy.

• Get professional advice.

A specialist property finance broker may help you understand what options are available for your development.

FAQs 

1. What is property development finance?

This finance is usually used for securing a piece of land, building new structures, making conversions and doing other major renovations.

2. How is Development Finance Different to a Mortgage?

Typically a mortgage will be used to fund an already completed property. Development Finance will help fund your project during development or major improvements. Development loans can be paid in stages.

3. Can I use Bridging Finance to Purchase a Development Property?

Yes! Bridging Finance is applicable in making intended short-term property purchases. These may include purchases at auctions and quick completions. However, you will need a realistic repayment plan in place and meet the lenders criteria.

4. What Do Lenders Look for?

Lenders will typically look for how much you expect to spend on your project, how much you expect your property to be worth when completed, your planning status, experience, security, how much you are investing and your exit strategy. This will vary per lender.

5. How Can I Reduce Risks?

Making a practical budget and obtaining expert valuations of your property will allow you to take into consideration any unforeseen expenses as well as incorporate a sound back-up plan that will help lower the risks involved. It’s crucial in deciding on a strategy for repayment.

Final Thoughts

When it comes to property development, you will need to create a practical budget and repayment plan. If you clearly know your possibilities, you will make well-informed decisions.

The use of specialized property financing solutions offered by Silver Oak Capital makes it easy for investors and developers gain insights into the available options.

How Property Bridging Loans Can Help With Your Next Property

Property transactions can be fast moving and having short term financial products can help. Property bridging loans allow people to borrow money temporarily to buy a property, invest in property or even some developments.

Short Term Property Finance

Bridging finance can be used by property buyers and investors to fill any temporary financial gap. Buyers may want to move into a new property but have not yet sold their existing property. Or investors may want to borrow money to get into position.

The bridging loan will depend on the lender, property, your situation and how you intend to repay. Knowing these can help determine if bridging finance is right for you.

When Can Bridging Finance Help

There are many reasons why short term property finance can be useful:

Buy to let – You may want to purchase another property but do not have the funds until you have sold your existing property.

Auctions – Often there are tight time frames to complete at auction.

Refurbishments – Some properties need a refurbishment before they can be put on the market with a traditional mortgage.

Investment – Investors may have a tight time frame when purchasing a property.

Refinance – If you are looking to get a long term mortgage but need some temporary finance then a bridging loan may be suitable with lender approval.

Each situation will be different so you should consider the costs, risks and how it would work.

What Should I Consider?

When looking at property bridging loans there are many factors to consider. The interest rate, arrangement fee, valuation fee, legal costs and length of the loan can all affect how much you will pay.

Your exit strategy is also very important. This will be how you intend to repay your loan. You may want to sell your property or re-finance to a long term mortgage. Consider what would happen if you had to wait longer to sell your property or your re-finance was not approved.

It is a good idea to shop around for lenders, be thorough with the terms of the loan and take professional advice if needed. Having a realistic repayment plan and budget can assist you in knowing what to expect.

Property Finance Options

Careful consideration should be taken when choosing the correct property finance for you. Silver Oak Capital helps clients in finding the most suitable property finance solutions according to their circumstances, properties and financing timelines.

Research has shown that, whether you are purchasing, bridging, or investing in property, doing research can enable you to make an informed decision.

How to Choose the Right Mortgage Broker for Your Needs

Buying, refinancing or investing in property is a big decision to make. There are so many factors to consider and having a knowledgeable mortgage broker can help you make the right choice when choosing your mortgage. They will walk you through the whole process and help you find the best mortgage for your needs.

What is a mortgage broker?

Mortgage brokers can clarify which types of mortgages are suitable for you. They will help you choose the lender that meets your requirements.

You will receive advice that would tell you the type of mortgage that meets your needs as well as what paperwork you need to prepare. What is available will depend on the broker, the lenders they work with and the situation you are in.

A good broker will be able to explain clearly what options are available, potential costs and help you to understand what the pros and cons of each mortgage option are.

Why an Independent mortgage broker can be useful

An Independent mortgage broker can help you look at different lender options for your mortgage. This may be useful if you have specific needs, unusual income or an investment property to buy.

Some brokers may have fewer lenders to choose from. You should ask what lenders they have available and if there are any restrictions.

A professional can help explain the difference between fixed and variable rates, deposit requirements, affordability and early repayment charges.

What to look out for

1. Experience and knowledge

Look for a broker that understands your mortgage needs. If you are looking to purchase a residential property they may not have the same expertise as someone who regularly deals with buy-to-let mortgages or complex property financing.

Ask them about their experience of similar situations and what they do for those that do not fit into the standard criteria.

2. Regulation

In the UK mortgage advice and arrangement may be regulated by the Financial Conduct Authority (FCA). Before starting to work with them check they are regulated and that they can help with what you need.

A professional will tell you what they can do for you, what they can advise on and any restrictions. It should be clear what the terms are.

3. Charges

Some brokers will charge a fee, some will receive a commission from the lender or a mix of both.

Ask for any charges to be clearly explained. When will you pay? Will they receive a commission from the lender? Think about the total cost of the mortgage including product fees and any other charges.

4. Communication 

When applying for a mortgage you will need to provide documents such as payslips, bank statements, proof of deposit etc. A clear communicator will help you understand what you need to provide and keep you updated on your application.

Look for someone that is clear with their answers, can explain why things are taking longer and will not promise anything.

Getting organised

Getting organised can help with your first meeting. Have details ready about your income, outgoings, debt, deposit and property you wish to purchase.

Think about your long term goals. Do you want to move in a few years? Do you want predictable monthly payments? Are you looking to purchase an investment property?

Ask any questions you may have about affordability, interest rates, terms, charges and documents. Providing accurate information will allow the broker to get a better understanding of your situation. However the decision to lend is made by the lender.

Finding the right mortgage support

Every borrower will have different needs. First time buyers may need help with understanding deposits and affordability. Existing homeowners may be looking to remortgage or release equity. Investors may need to think about rental income, property type and specialist criteria.

Silver Oak Capital can help with mortgage and property finance advice. When choosing a provider think about their experience, range of service, transparency and if they can clearly explain the right options for you.

Remember your mortgage recommendation should take into consideration your financial situation, borrowing goals and risk appetite. No broker can guarantee that you will be approved by a lender.

Frequently Asked Questions

1. What is a mortgage broker?

A mortgage broker can help you understand what mortgage products are available. They can help you understand what lenders are looking for. What they can do will depend on what they are authorised to do, their knowledge and relationship with lenders.

2. Is using a mortgage broker better than a bank?

This will depend on your situation. A mortgage broker may give you access to more products from a range of lenders whereas a bank can help explain what mortgages they have available. Consider the overall cost, products and support.

3. What documents may I need?

You may need to provide ID, payslips/self employed income, bank statements, debt and proof of deposit. The lender may ask for further documents.

4. How much will a mortgage broker charge?

Some charge a client fee, some receive a commission from the lender or a mix. Ask for any charges in writing.

5. Can a mortgage broker guarantee I will be approved for a mortgage?

No. A mortgage broker can help you understand what options may be available and put your application together; however the lender will make the final decision on whether they can lend you based on your affordability, credit history, property and their criteria.

Conclusion

Knowing what your financial goals are and looking at what services are available will help you find the right mortgage professional. Asking clear questions about charges, access to lenders and experience will help. Taking your time to research will help you make an informed decision and avoid any surprises.

Mortgage Bridging Loans: A Flexible Route to Property Finance

Sometimes mortgages are unable to accommodate the rapid nature of property transactions. Mortgage bridging loans are a form of short-term bridging finance suitable for those in need of a financial bridge for a property purchase or as a means of providing finance to facilitate a property investment scheme.

Mortgage bridging loans are normally short term loans, which are repaid by the borrower through a more permanent mortgage when the property to be sold has been sold or from the sales proceeds of another property, if the loan is used to finance the purchase of a new property. They may also be used to help fund the purchase of a property requiring significant works to be completed before being able to obtain a more permanent form of finance.

The amount of finance on any mortgage bridging loan, together with the level of interest charged and any exit fees will depend on the individual circumstances of the borrower and the particular property being purchased. It is important that a borrower take into account the overall cost of the bridging mortgage loan and the timeframe for repayment before taking on any bridging finance arrangement.

Silver Oak Capital will be happy to discuss your property finance needs and identify any suitable finance packages available to help fund your property investment. We are able to assist you with your property financing requirements whether you are a first-time buyer, or require a mortgage bridging loan to provide interim finance for property development works.

How to Plan Property Development Finance for a Successful Project

Property development can provide exciting rewards but an initial idea needs to be supported by funding which is appropriate for the work involved. Understanding property development finance can help developers to consider their funding options, create suitable budgets and navigate the costs associated with buying, renovating or building a property.

From refurbishing an existing property to converting a commercial building or constructing new homes, a financial strategy is essential to understand the likely costs, potential revenues and any risks prior to commencing work. Here we consider some key factors for developers when assessing property development finance.

Understanding Your Project’s Financial Requirements

Every property development project will have different funding requirements according to the nature of the work and its scale. A small-scale refurbishment will involve significantly lower costs than a substantial new residential development which will include land purchases, construction costs and a range of additional fees. A realistic assessment of the likely costs associated with your project will help you to determine the most suitable type and level of finance.

Consider the costs which may be incurred which could include the following:

• Land or property purchase costs

• Planning applications and professional fees

• Construction costs and materials

• Legal, valuation and surveying costs

• Contingency funding for any additional costs

• Marketing and sales costs if applicable

A clear breakdown of the costs will enable developers to understand the likely total costs and help lenders to determine if a proposed scheme is viable.

Exploring Suitable Funding Options

The most appropriate financing package for a developer will depend upon the size and timeframe of the project, level of security, likely exit strategy and other factors. Developers can consider commercial mortgages, bridging loans or specialist funding which typically focuses on the value at completion. Some lenders will offer commercial mortgages for particular property purchases whereas bridging loans can offer short term finance for a time sensitive purchase or refurbishment project. Specialist development finance may be suitable for longer projects based upon a phased construction schedule and the predicted value of the completed property. Each option should be compared to understand the most appropriate funding structure considering any deposit, costs and ongoing interest payments.

How to Prepare for a Finance Application

A strong finance application will provide lenders with the confidence that the property development project is viable and that they will be able to successfully recover the amount due. Prior to submitting an application to a lender, it is important to compile all of the relevant documents which will support the submission.

Take note of the following key points: 1. Come up with a sensible budget that takes into account construction costs, purchase costs (where relevant), professional fees, and contingency costs 2. Draft a sensible project schedule that provides estimated dates for completing key project milestones. 3. Provide proof of past experience to show that your planned scheme is viable. 4. Determine your exit strategy to illustrate how you will pay back the loan including whether you will pay it off through selling assets, refinancing or another alternative.

Take note of your own financial resources and any existing loans so that you know you will be able to cover any unexpected costs.nal supporting documentation including planning approval, development appraisal, survey reports, contractor quotes and personal or business financial records.

Managing Risks Throughout the Development

While a well-drafter project schedule and realistic budget can significantly reduce development costs, unforeseen events can occur throughout any development. Developers must also consider exit strategy risks at the point of repayment. It is important to develop a realistic contingency plan when compiling a budget for a development project.

Many developers can underestimate potential costs and overestimate revenues when applying for development finance. A more realistic appraisal will include a reduction in expected sale prices, increased construction costs and delays to the projected completion date. A contingency fund will help to cover any additional costs whereas regular budget reviews will enable developers to spot any financial challenges at an early stage and adjust the budget accordingly. Developers should also consider alternative exit strategies if unforeseen circumstances at the point of repayment impact the initial repayment strategy.

Making Informed Funding Decisions

When making property development finance choices, developers should evaluate borrowing costs from various lenders, taking into account set-up charges, valuation costs, legal fees, drawdown requirements, continuing interest, and any penalties for early repayment. Developers should compare the overall cost of borrowing for each suitable option as well as confirming that the terms reflect the proposed schedule for the development. Independent legal and financial advice can help to understand the risks associated with any finance contract.

For specialist development funding advice, Silver Oak Capital can be an excellent starting point for exploring your finance options and budgeting requirements according to the needs of your property development project. Any proposed finance facility will depend upon the suitability according to the lenders specific criteria.

Ultimately, it is important to combine realistic budgeting with suitable funding, experienced professional advice and skilled project management to realise the rewards of property development.

Frequently Asked Questions

1. What is property development funding?

It is the funding which is required for development projects including the construction of new properties, the conversion of an existing property or a substantial refurbishment. The finance options will depend upon the nature of the work and the requirements of the lender.

2. Who can apply for development funding?

Property developers, investors and organisations may apply for development funding depending upon the requirements of the lender. All applications are reviewed according to the likely viability of the project, experience, affordability, security and exit strategy.

3. What documents are usually required?

A property development finance application will typically include a budget, project appraisal, planning documents (if applicable), construction estimates, property valuation and financial records. All right, individual lenders, on the other hand, might ask for other documents.

4. How can developers reduce financing risks?

Regarding how the builders can decrease the financial risks, they can do so by making sure that the budgets are realistic and that there are some backup funds, if necessary, keeping to the construction schedules, and developing some 'exit' strategy to ensure that they will be able to pay back the loans.

5. Is specialist development funding suitable for every project?

No. Every development project will have different requirements according to the works involved, project size, budget, timeframe and risk profile. Developers should compare financing options and seek independent advice to identify the most suitable option for their project.

No. Every development project will have different requirements according to the works involved, project size, budget, timeframe and risk profile. Developers should compare financing options and seek independent advice to identify the most suitable option for their project.

Need Finance Fast? How Bridging Loans Can Help You Move Forward

When it comes to property dealings, the timing can work both ways. Whether you need to buy a new property before selling the existing one, or you want to renovate the place, or the estate agent instructed you to do a swift exchange, time is money.

With mortgage bridging loans, you can bridge the gap and afford to complete a property purchase without selling your current house, or fund a renovation project with a property investment scheme.

A mortgage bridging loan is a short-term solution to any property-related mortgage needs. Typically, this type of loan acts as a second mortgage, thereby serving to join the new property acquisition with the selling of the previous one.Nevertheless, bridging loans aren't a permanent answer, so it must always be ensured that the relevant interest rate, setup costs, repayment conditions and other possible expenses are calculated before any decision is made.

To succeed in getting bridging loans, it is necessary to have a so-called exit strategy, like selling property or re-mortgaging to pay off.If you need property financing for a short period or you just want to learn about the possibility of the mortgage bridging loan, you should get in touch with Silver Oak Capital. We can help you find the most suitable property finance options to match your requirements.

As for now, we invite you to check the Bridging Loans UK and think over the possible ways of using bridging finance.