Development Finance
If
you are looking to raise finance for Property
development, we can quickly source you the
best deal to suit your individual circumstances.
House
Building Finance
How
Property Development Finance 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.
|
