Construction Loan

Construction Loan

Construction Finance

 

If you are looking to raise finance for property development, we can quickly source you the best deal to suit your individual circumstances.

How A Property Development Loan Works

 This sector including construction, land development, renovation, and property building can prove to be very profitable though there are obvious risks involved with construction and land development.

A lender will potentially offer finance for a percentage of the land to be purchased then release payments as the property is developed. These payments can be in arrears or in advance. The loan to value (LTV) that will be released in stages will depend upon the quality of the deal and the criteria of the lender.

There will want to look at a detailed costings breakdown of each construction stage, so that might include for example land purchase, ground work and services, footings and base, shell, roof, first fix, second fix, final snagging and sign off.

Land would have planning permission and be researched for ease of salability after completion. The company would be assessed on their pervious history of successful construction projects. The property drawings, company credit history and marketing plan of sale would be investigated.

The lender would work out the draw-down of funding’s on a final open market valuation of completion. This figure would be used to calculate the LTV offered to the client. Normally this lending is short term and given with an exit strategy of sale or other form pay-back security.

This criteria would be with similar to building construction works, renovations and land development. Some financiers in the construction sector might prefer to take out an equity stake in the final profits, in effect be a form of partner in the project.