If you are in the business of developing property, then you definitely understand that you cannot afford to do it alone. You need all the funding you can get, unless of course you have large sums of money stacked somewhere. Property development finance is something that every developer should acquaint themselves with, regardless of the scope of their property development.
This is a type of financing that is able to cover 100% funding, which includes ownership of the building site and any other actual cost of building the property. Usually, the interest charged will be based on the expected value of the property once the development is completed.
Before you get yourself involved in property development finance, you should ensure you understand the elements involved. For example, you should expect to hear about debt and equity finance. This is whereby the investors will get a portion in the ownership and payment of dividends based on the gains received from the property. You may also hear of mezzanine finance. This is a type of finance that is somewhat similar to debt and equity finance, but has a higher interest rate. You should expect to repay this kind of financing after the period not less than 7 years but not exceeding 10 years.
It is crucial to accurately assess the expected profits that will be as a result of your property development. This way, you can be sure that getting property development finance is a wise option as should be bridging finance limited. The last thing you want on your financial portfolio is a record of losses and loans to be repaid.
Before you can get the funding you require you will need to construct a proposal detailing your costs. If you cannot do this on your own, you should employ the services of a commercial mortgage broker. A commercial mortgage broker will know what to include in the proposal and what language to use. They will also have greater reach to the marketplaces, which is beneficial to you. Most prospective lenders will take you more seriously if you have the valuations in the proposal appraised by a surveyor who operates independently.
When it comes to the rates charged in property development finance, there are several factors that are taken into account. Your experience in property development will be taken into consideration. The state of the industry sector and your proposal will also be considered. Remember that the lending institution will be looking to eliminate the risks as far as financial loss is concerned and you should therefore expect a lot of scrutiny.