Guide to Development Finance: New Builds, Refurbishments, Conversions
Development Finance is quite a popular type of funding option for those who have a large development or heavy refurbishment plans. At Amplo Commercial Finance, we can arrange funding from £25,001 with no upper limit.
Development Finance applications are assessed on a case by case basis, based on the strength of the application, with the interest usually rolled into the loan.
What is Development Finance?
Development finance is a type of Property finance used to finance the construction, conversion or heavy refurbishment of buildings. The finance can be used on residential, buy to let and commercial properties.
This type of funding is usually set up as a short term loan to fund the project only during the build.
How does Development Finance work?
The term for the finance can be anything from 6 months to 24 months and once you have received the funds, you will pay a certain amount each month.
How much funding can you receive from development finance?
The amount of funding will be determined by three areas:
Current value – the value of the site with planning or the value of the property before refurbishment
Build Cost – how much will the project cost?
Gross Development Value – the value of the completed property or properties once all the work is completed
What are the charges involved with development finance?
The lender will charge fees and interest for the loan with the amount of the charges depending on:
- Amount borrowed
- Percentage borrowed against the overall costs – the current value and build cost combined
- Term the loan is required for
What supporting documents will you need?
Lenders will ask for a number of documents when you’re applying for property development finance. The more documents and evidence you can supply, the higher the chances you will be accepted.
You may be asked for the following documents but no limited to only these documents:
- Overview of Project
- Schedule of work and specification
- Exit strategy
- Purchase price
- Development cost
- Gross development cost
- Previous experience
- Asset and liability form
You can download our Document Checklist guide to learn more about the documents that you may need.
How much funding can you receive from development finance?
The amount of funding will be determined by three areas:
Current value – the value of the site with planning or the value of the property before refurbishment
Build Cost – how much will the project cost?
Gross Development Value – the value of the completed property or properties once all the work is completed
How to repay a development finance loan?
Repay the full amount using the sales proceeds from the finished project
Refinance your development finance onto a Development Finance Exit loan if you’re looking to potentially fund another future project without having to wait for the sale of the current project.
Refinance onto a long term loan such as buy to let mortgage if you’re looking to rent the property out or a residential mortgage if you’re looking to move in yourself.
Property development finance options also consist of bridging loans and mezzanine finance. If you wish to find out more about the different finance options available, don’t hesitate to speak with our team directly. You can call us on 01270 443510 or complete our contact us and a member of our team will be in touch.
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Amplo Group
11 Mallard Court, Mallard Way,
Crewe, Cheshire, CW1 6ZQ
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