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Property development finance is the funding solution to aid property developers with refurbishment or build of a residential property. Whether you are a small property developer building 2 units a year or a company with many schemes, property development finance is available to you.
Residential Property Development Finance
Helps with the purchase of residential building sites and the development of houses or flats for sale. Funding is available for the purchase of the land, construction costs, utilities, professional costs such as architect’s fees, and roll-up of interest – subject to lending criteria. We can also provide finance for residential conversions such as barns or churches.
Commercial Property Development Finance
Aids with the development of commercial properties. Full repayment of any loan would be expected to emerge from the sale of the property or refinance after the work has been completed.
Ascot Bridging Finance can provide fast access to funding with the minimum of formalities which can be used for a range of purposes including property investment, commercial property, land, overseas investments, buying a business, or to raise capital to aid cash flow.
Renovating Property or Buy to Sell
Many clients see a property they like but sometimes the valuation reveals it is not ‘mortgageable’. As Ascot Bridging Finance can base their bridging finance on the Open Market Value of the property, the client can take out a bridging loan to renovate the property to sell at a profit or take out a traditional buy to let mortgage in order to keep the property as an investment.
Below Market Value Purchase
Conventional lending is based on the purchase price of the property whereas Ascot Bridging Finance can offer bridging finance based on the Open Market Valuation of the property. This is great if an investor has sourced a below market value property as in many scenarios he can purchase the property without putting in any cash.
Property Renovation Projects
Seen a potential money spinner? Driven past an old and empty dilapidated Victorian terraced property and dreamed of ending your day job and using your skills to help turn this wreck in to something you and the local community could be proud of? Maybe it can be turned into 4 x 2 bedroom flats? Due to the run down condition, a traditional mortgage would not be suitable to finance this project so why not use a bridging loan to buy this for property development and then once the work is complete and the house is split into 4 separate units these can either be transferred to a traditional mortgage and the properties rented to provide an income or they can be sold in part or as a whole hopefully for a big profit.
Example: You have the opportunity to purchase a property at a very low price but it needs a lot of property development. Once renovated the property could be valued much higher therefore making a sizeable profit. You have looked at obtaining a mortgage but have been refused as the property is not suitable due to its state of disrepair. A property development loans can be secured on the purchase and property development. To repay the property development loan you can either refinance with a mortgage or sell. The profit released can then be used for another purchase if required.
Property development loans are provided for small developments like Barn Conversions, single and multiple unit house builds small flat developments, multiple flat conversions and refurbishment projects.
FAQ
01/ What is property finance?
Property finance refers to specialist funding solutions tailored for the acquisition, development, or refurbishment of real estate. It encompasses a range of products, such as bridging loans, development finance, and buy-to-let mortgages.
02/ How do I get funding for property investment?
To secure funding for property investment:
– Evaluate your financial position and creditworthiness.
– Determine the type of property finance suitable for your needs.
– Approach specialist lenders, high street banks, or use a mortgage broker with expertise in property finance.
– Provide necessary documents, such as proof of income, credit reports, and details about the property.
– Ensure your proposal highlights the viability and profitability of the investment.
03/ How many properties do you need to be financially free UK?
The number of properties required for financial freedom varies based on individual financial goals, property values, rental yields, and expenses. However, as a rule of thumb, generating a substantial passive income through rental properties often requires a well-diversified portfolio of several properties.
04/ What is an example of development finance?
Development finance is a loan used for property development projects. An example would be a property developer securing finance to convert an old warehouse into residential apartments. The loan would typically cover the purchase of the warehouse and the costs of renovation.
05/ How do you calculate development finance?
Development finance is often calculated based on:
– Gross Development Value (GDV) – the estimated value of the project once completed.
– Cost of construction and development.
– Any associated fees and charges.
Typically, lenders might offer a percentage (e.g., 70%) of the GDV or of the total project costs, depending on the risk profile.
06/ What are the different types of development finance?
Development finance includes:
– Land Acquisition Loans: Finance for buying land.
– Construction Finance: Loans to cover the costs of building.
– Refurbishment Finance: Funds for renovating existing properties.
– Stretch Senior Debt: Provides higher leverage, combining elements of senior debt and mezzanine finance.
– Mezzanine Finance: A secondary loan used alongside the main development finance to increase the total loan amount.
07/ What is the maximum LTV for development finance?
The maximum Loan-To-Value (LTV) for development finance varies by lender and project risk, but it’s commonly between 60% to 70% of the Gross Development Value (GDV). In some cases, with additional security or for exceptionally strong proposals, this might stretch slightly higher.The maximum Loan-To-Value (LTV) for development finance varies by lender and project risk, but it’s commonly between 60% to 70% of the Gross Development Value (GDV). In some cases, with additional security or for exceptionally strong proposals, this might stretch slightly higher.
