Specialist development finance is known for being available exclusively to experienced developers with an established track record. In order to mitigate risk, lenders are typically only willing to work with those who can offer extensive evidence of their success in the field.
All of which is understandable, but it nonetheless poses a problem for first-time developers. Every property developer needs to start somewhere, so how can you fund a development project if you cannot qualify for development finance?
Exploring the Options
This is where broker support can prove invaluable, as specialist development finance is by no means the only option available for financing property developments. Consulting with a broker will help you build a clear and confident understanding of the options available, making it easier to pursue an appropriate product for your project.
Bridging Finance for Property Developments
For example, a bridging loan could be just as flexible, practical and affordable as a development finance loan. Specialist development finance is, at its core, a form of bridging finance – a short-term loan taken out over no more than 24 months, and repaid in a single lump-sum payment on an agreed date.
Like development finance, a bridging loan can be secured against the current or future value of the development, with high LTVs available of up to 75% or more. Bridging finance can be organised in a matter of days, and can be used for any legal purpose whatsoever.
But unlike specialist development finance, all funds raised by way of a bridging loan are released immediately – not in a series of stages. In addition, you do not necessarily need to present your lender with any evidence of your experience or track record in the field to qualify.
Where development finance is not an option, a bridging loan could be the next best thing – if not even more convenient.
Secured Commercial Loans and Business Loans
It may also be possible to qualify for a specialist commercial loan or business loan, again secured against the property or development you are working on. These facilities work in a similar way to a conventional mortgage, secured against assets of value and often with a deposit payable up-front.
Commercial loans and mortgages offer greater flexibility where repayment is concerned, as the balance of the loan can be repaid gradually over the course of several years (or decades). Relevant industry experience may be considered as an eligibility check, but is unlikely to count you out of the running as a first-time developer.
Presenting a Convincing Case
With the help and support of an experienced broker, it may even be possible to qualify for specialist development finance as a first-timer. What matters is the strength of your application in general and whether you are able to present a convincing case to your lender.
If you are clearly a safe bet and your project is a guaranteed success story, you have a good chance of qualifying – even with no past experience. Your broker will help determine your viability for development finance (or the alternative options available), ensuring you target only the most suitable lenders for your requirements.
raig Upton supports UK businesses by increasing sales growth using various marketing solutions online. Creating strategic partnerships and keen focus to detail, Craig equips websites with the right tools to rank in organic search. Craig is also the CEO of iCONQUER, a UK based SEO Firm and has been working in the digital marketing arena for many years. A trusted SEO consultant and trainer, Craig has worked with British brands such as FT.com, djkit.com, UK Property Finance, Serimax and has also supported UK doctors, solicitors and property developers to gain more exposure online. Craig has gained a wealth of knowledge using Google and is committed to creating new opportunities and partnerships.
Published by Craig Upton