Development Finance is a form of short term bridging to fund the cost of construction of property prior to its sale. It is a specialist form of funding not offered by all lenders and many restrict the geographical areas of funding.
The principle is that the lender will advance funds at pre determined stages of construction, and up to an agreed maximum amount, with the funding being repaid from the proceeds of sale of the completed property. In many cases interest charges can be rolled up into the overall debt.
The facility is restricted to companies or persons experienced in building and lenders will want evidence of that in the form of previous successful building projects.
Finance is normally available for 100% of the build costs plus an amount toward the land purchase costs of between 30% and 50%. All these amounts subject to an overall limit of, say, 50% of the total sale value (the gross development value or GDV). These limits differ from lender to lender.
Rates vary widely from an annual rate of 4.5% to as much as 15%. There is normally an initial fee to the Lender of 2% of the funding required and an exit fee of a similar amount.
At Access Commercial we will source a lending scheme to meet your requirements for the immediate need for finance and for the future.
Access Commercial Mortgages can help with all commercial finance needs; contact us today for a fast response.