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.
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