Development finances come in various forms. This form of lending is used to fund refurbishments, conversions, or land purchases & ground-up developments. Most developments loans are short-term and are only used for the duration of the building project.
Development finance enables clients to take on larger projects than they would normally consider with traditional funding methods, thus potentially increasing their revenue. Furthermore, it helps maintain liquidity by preventing the client’s cash from being tied up in a project. Most successful projects produce higher levels of return on investment (ROI) because less personal capital is utilised; although there are costs involved in financing the project, the returns from the sum personally invested are greater.
There is a multitude of factors that will influence the lender’s appetite, such as land costs, development costs, project time scales, development experience, and contingency costs. Once satisfied, the lender will pay the initial sum required to purchase the land or property and the development costs will be paid out in staged payments throughout the project to maintain development targets and maintain efficient cash flow.
The majority of development financing facilities are set up to allow for the addition of monthly interest charges to the loan facility. When the loan is redeemed, the interest is repaid. Adding interest to the facility relieves strain on the developer, allowing them to focus on the development. If units are sold throughout the development process, some or all of the revenues will be used to pay down the balance on the development finance facility.
Because of the short-term nature of development finance, there must be a viable exit strategy in place to pay back the loan and interest. When a developer builds to sell, he or she sells the entire development or individual/multiple units. Alternatively, there is Build to Rent — when a developer refinances a completed development onto a long-term loan, allowing the developer to rent the new property out. On larger scale developments a combination of build to sell and build to rent is available, in which a developer sells some of the completed units while keeping a portion of the units for themselves to rent out as investment properties.
Most Buy-to-Let mortgages are not regulated by the Financial Conduct Authority.
Development Finance requires careful navigation of all the lenders and products, to ensure the client is able to get the best terms available. We pride ourselves on having strong relations with numerous development lenders to best suit our client’s needs. Our advisers aim to provide bespoke solution paired with a viable exit strategy to ensure you are not left stranded. We have partnerships with architects, developers, and solicitors who can also assist in the success of your project.
Triton Private Finance Limited is registered in England and Wales with the company number 13548123. Registered Address: 128 City Road, London, EC1V 2NX.
Triton Private Finance Limited is an Appointed Representative of PRIMIS Mortgage Network which is a trading name of Personal Touch Financial Services Limited. Personal Touch Financial Services Limited is authorised and regulated by the Financial Conduct Authority.
The guidance and/or advice contained in this website is subject to the UK regulatory regime and is therefore restricted to consumers based in the UK. The Financial Conduct Authority does not regulate some forms of buy to let mortgages.
This firm usually charges a fee for mortgage advice. The amount of the fee will depend upon your circumstances and will be discussed and agreed with you at the earliest opportunity.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
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