Fast & Flexible Property Development Loans

Development finance for commercial and residential projects

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A SIMPLE WAY TO DEVELOP

How to secure property development loans

Property development finance can be one of the biggest obstacles faced by developers, investors and landlords. This is a complex market where products often come with reams of small print and very specific borrower obligations. There may also be a lack of flexibility, which regularly causes problems because property development projects are notoriously hard to schedule accurately. From missed entry dates and collapsing chains to hidden repair bills and overspends, conventional finance models don’t always reflect the fluid nature of property projects. As an example, it’s impossible to know before attending an auction or placing a sealed bid on a BTL portfolio precisely how much money will be required before the dwellings are sold or rent.

 

At Tailored Money, we believe property development finance shouldn’t be a burden. That’s why we’ve introduced a range of property development loans. Effectively short-term property development mortgages, these flexible loans can be for as little as £10,000, over periods of up to three years. And while they might have been called bridging finance once upon a time, the greater flexibility offered by Tailored Money’s products makes them suitable for much more than bridging the gap between property transactions. We have long-standing relationships with key lenders, enabling us to tailor finance packages around your specific needs and preferences.

 

Below, we outline everything you need to know about short-term property development loans – starting with an obvious question…

What can I use these loans for? A property development mortgage may be used in a variety of ways, on both owner-occupied and investment properties. Historically, they were used to run two homes side by side, and this remains useful if you’re looking to overlap a new property purchase with the sale of an existing dwelling. They can also provide structured finance to convert an existing property, or even to fund a new-build for resale or rental. That includes properties being built on land with planning permission but nothing else on it. Our property development mortgages are even available on commercial and industrial premises, including shops, offices and factory buildings.

 

How flexible are these products? Because Tailored Money treats every application as unique, we can adapt our property development loans to meet your individual requirements. You don’t need a track record of previous property developments, and you’re not obliged to borrow the full amount if the project comes in under budget. We can arrange staged funds release, where you’re only charged interest on instalments which have already been provided. And because property projects are notoriously hard to schedule, we don’t apply early repayment charges.

 

What restrictions are placed on loans? Although we can usually arrange structured development finance to suit your specific needs, there are a few caps in place. You’re able to borrow up to 100 per cent of a building project’s total cost, providing it’s less than 70 per cent of the estimated gross development value upon completion. This is calculated on a case by case basis. And although you’re able to borrow over one to three years, the latter is usually a maximum term. Finally, it’s rare to be able to borrow more than 60 per cent of an undeveloped site’s purchase price, and you’ll probably need planning in place to complete the agreement.

 

What can I use these loans for? A property development mortgage may be used in a variety of ways, on both owner-occupied and investment properties. Historically, they were used to run two homes side by side, and this remains useful if you’re looking to overlap a new property purchase with the sale of an existing dwelling. They can also provide structured finance to convert an existing property, or even to fund a new-build for resale or rental. That includes properties being built on land with planning permission but nothing else on it. Our property development mortgages are even available on commercial and industrial premises, including shops, offices and factory buildings.

What are the benefits of property development loans?

 

Tailored Money Tick No experience needed. As long as you use qualified professionals (architects, builders, etc), you don’t need personal experience of property development to be approved.

Tailored Money Tick Up-front finance. No more sleepless nights worrying about finding the funds to get a project started or acquire a plot of land. The money is there when you need it.

Tailored Money Tick Staged payments. Instead of receiving the whole loan amount up front, and instantly incurring interest on the whole sum, you can stagger payments as a project progresses.

Tailored Money Tick Greater market access. These loans are ideal for unmortgageable properties (non-standard construction, derelict, etc), giving you an edge over bidders with less flexible finances.

Tailored Money TickNo limits on borrowing. Whether you’re converting a house or constructing a hotel, finance could cover the full cost of the project until you’re ready to sell, rent or refinance.

Tailored Money TickBecause loan periods are between 12 and 36 months, interest payments are far lower than conventional mortgage vehicles. This slashes overall borrowing costs.

 

What sort of interest rates will be involved? Tailored Money customises every property development mortgage around your unique needs, so interest rates vary from one application to the next. Factors affecting interest rates include the nature of your project and its estimated end value, your own experience, how much is being borrowed, and what collateral you’re able to put up as security – which may include other properties you own.

 

What costs will I incur with a short-term property development mortgage? Again, this varies from one application to the next, since Tailored Money won’t try to steer you towards a limited selection of inflexible products with pre-arranged costs. However, you’ll probably have to pay an arrangement fee (or facility fee), which is a percentage of the total loan amount. There will be monthly or annual interest rates, which fall over longer borrowing periods. There’s also likely to be a completion (or exit) fee, calculated as a percentage of the total loan cost. However, property development loans are still an affordable option compared to conventional mortgage vehicles, which may not even be appropriate for your intended project.

 

If I want to go ahead, what happens next? If you’d like to proceed with a flexible property development mortgage application, contact Tailored Money for an initial no-obligation consultation. We’ll explore your options and give you plain-English explanations of the best options to suit your circumstances. We’ll act on your behalf during the application process, offering practical advice throughout the project’s lifespan, and we’ll be happy to help with any issues or queries that arise along the way.

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