Building Better Property Projects Through Smarter Funding Choices

Property developments require a good plan with a budget, research, planning and the correct finance. If you’re looking to buy land, renovate a property or build new housing then having a solid plan on how you want to fund your property will help you.

Property development finance can help you fund the development of your property. This could be to fund the purchase of land, building costs, renovations or any other costs that you need to pay. When looking at your finance options it’s important to know what type of property development you have, roughly how much your property will cost, how long you expect your property to take to complete and your repayment plan.

It’s important to understand the different types of lending available. Compare interest rates, terms, fees and what the lender requires to help you make the right decision.

Silver Oak Capital can help property developers find the best finance option for their property by working with a wide range of lenders. With the right advice and well thought out property development finance you can feel confident when approaching your property. This will help you achieve your property investment goals..

Turning Property Visions into Reality with the Right Finance

Property investment and development can be an exciting prospect. However, it is important to have a solid financial plan to ensure you have the correct funding options in place whether you are buying land, renovating or residential development.

Property development finance will allow you to work on projects that will require building, conversion or improvements. This can help you manage the different stages of your project, from buying the land, to building. Usually this will depend on how big the project is, what the cost of the project is likely to be, how much value it will have and your level of experience.

Understanding Property Development Finance

Property Development Finance is often used for both residential and commercial developments. Unlike a standard mortgage, which is generally for buying an existing property, property development finance is set up based upon the developments needs.

Generally lenders will look at the following:

• Whether the project is feasible

• How much it will cost to develop (building, labour, professional and others).

• Your experience of developments

• How you will pay back the loan (selling property, refinancing etc.)

• The valuation of the property

By understanding these requirements you can put together a better application.

When can Property Bridging Loans Be Useful?

Sometimes property can be a tricky process. You may require some short term funding to buy the property quickly, finish the purchase before selling another asset or if you need funding to complete renovations.

Here is where property bridging loans can be useful. They are usually a short term finance option to help bridge any temporary gaps.

However, it is important to think about the interest rates, arrangement fees, how long you will take to pay back and how you intend to pay back. As bridging finance is usually short term, it is important to have a realistic repayment plan.

Choosing the Correct Property Finance

All property projects will have different financial requirements. Depending on what stage you are at with your development, how much money you have available, how long the project will take and what your overall goals are with your investment.

A good finance broker will be able to help you understand what options are available. They can help you compare the different options and find lenders that are more likely to fit your criteria.

Silver Oak Capital can connect you with a range of property finance lenders. We can help you understand what options are available for your requirements. Our team can support you to understand the different structures and find potential solutions.

Final Thoughts

Having the correct funding in place for your property investment is key to having a successful investment. By understanding development finance and short term borrowing options you can feel more confident when approaching your property.

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.