Some tips on applying for Development Loans

What’s needed for an initial application forDevelopment Finance?

For an initial enquiry for Building Finance. we do not necessarily need exhaustive costings or a schedule of works but some pieces of information are useful to have from first contact. Of course we understand that you may wish to discuss your options at a very early stage and we would be happy to hear from you. Even without the information below we will always assist as much as we can and give you as much information as possible before you get too far into preparations.

What is the Development Project?

The sort of project you are proposing to undertake will determine whether you need building finance or possibly just a Bridging Loan in the case of a basic Property refurbishment.

If anything structural is taking place then, of course, it would be more involved and require more flexible finance than a single draw down.

Where is it?

Firstly it is useful to know where your development project is, “location location location”, as they say. We realise that it is not always possible to give the precise address at the initial enquiry stage but we need some indication of the area. Without it the enquiry cannot be properly assessed.

Do you own the site, if not what is the purchase price?

If you are already the site or property owner you are potentially in a strong position, depending on any current borrowings secured on it. If not the price you are paying is a crucial component to whether your project will deliver the profit you are hoping for or expecting – and this is a business so has to be considered before you even contact us.

Having finance on the subject security has other implications too – will the lender allow you to split the title and if so how much might they want to allow it to happen?

What is the cost to carry out the work?

As mentioned above though we don’t expect a full run down of costs on the initial conversation we will need to know the amount you believe it will take to get all the work done. Where we lend into a project we want to know that the Development Loan will cover all costs. Running out of funds before work is finished can ruin a project and nullify all the hard work you have carried out to that point.

What will the Gross Development Value (GDV) be?

The predicted end value of the development regardless of it’s size and type is crucial. You should also be realistic, we will be, as would any other lender. It is vital that you know the end value of the project and that it shows a good return on your capital.

With the above information we can start to make an informed decision as to whether your project fits our criteria. We want to do deals and provide building finance so the more you can give us at the start the better. We look for reasons to say “YES” so with more information at our disposal we can find more positives for your scheme.

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