Property development can range from anything like a new home, a detached family townhouse, garage, extension, retail outlets, offices or even industrial warehouse complexes.
Development funding and loans often start from £50,000 and can go as high as £20 million. Developers can often be contracted to build a series of new homes across several hectares of brownfield sites, which would see costs run into millions of pounds, all needed upfront.
However, despite the large amounts these loans often are – they are primarily short term. Work on a refurbishment, new build development, loft conversion, extension or brand new home build is expected to get underway as quickly as possible.
Building work is not something that can be wrapped up in a matter of weeks, but it should not take several years either. Bearing in mind the need for speed in any property development process, the average term of these loans tends to be between six and 18 months long.
There should also be a factoring in period for resale. When the loan period ends, money has to be paid back. If you have built and developed a number of properties that have not been sold by the time the loan ends, then you may have to take out a further loan to cover the period between the building work’s completion and the sale of the property.
So, if the development time has been estimated to take 18 months, the loan period should allow a few extra months added on to allow the sale to complete following the end of the building project.
To find the best property development finance options, you should now avoid the old way of doing it, which meant going to see your bank manager. Since the Financial Crisis that struck in 2007, banks are no longer the go-to solution when it comes to lending.
It was almost an overnight economic issue which meant developers could no longer get a property development loan for love nor money. A gap opened up in the financial market and it was not filled right away. Development of homes and other property projects were either placed on hold or not taken up at all.
Bridging loan companies and specialist lenders did come on to the market and slowly the finances surrounding property development were up and running again. To find some of the best rates available in 2018, check Target Mortgages and seek out the finest of over 80 lenders.