Property Development
Finance a ground up project
Property development lending is similar in many ways to the bridging finance described on this page, aside from being based on the Gross Development Value - the value of the property once the build is complete. Another difference is that bridging finance is designed for properties already in existence whereas development finance is for 'ground up' projects i.e. plot purchase without a structure.
Mortgage Evolution can cover unregulated development finance i.e. building as an investment or regulated, which is building a home to live in. This is an important point which will be discussed during our first meeting, to ensure the business is placed with the correct lenders.
This can be a complex area of lending so it's always best to encourage a discussion early on but the two key factors are planning permission - is i in place? And what experience do you/the contractor have? Once we know this we can look at which lenders have the appetite at that time for that particular project.
Finally, another key point is profit - you as a developer need each project to be worthwhile, lenders also make this a requirement mainly so they are also protected with the general opinion being a 20-25% profit in the project. Just like bridging, the 'exit' is important and something your Mortgage Evolution broker would cover at the outset. This would usually be sale but if you chose to retain the properties we would ensure the finance was possible and in place to clear the development finance.
The level of your experience will determine what pricing and lender options you have - the greater experience the more attractive to lenders, however that is not to say first time developers cannot succeed in securing competitive finance which enables the project to progress and complete.