Property development is a multifaceted field, particularly when it comes to financing. Ultimately, the first best initiative to take when ascertaining the type of finance you need is to calculate how widespread the project is, how long it will take, and how much it is likely to cost keeping in mind both the best- and worst-case scenario. At Bridging Loans 247 all your commercial property development finance requirements are handled by a lending panel promptly and speedily.
All thriving property developers are good intelligent planners, and securing the right finance is a crucial component in development success whether you’re buying your company’s premises, or growing your rental portfolio.
Commercial Property Development Finance
Development finance is short term finance consumed by property developers and investors to purchase a plot of land or existing property to renovate it and sell it for commercial profit.
The amount that you can easily borrow is typically several million and is based on your Total Development Value which is what the property will be worth after all your desired development is completed.
You can generally borrow up to 50% to 70% of your total development value and lenders usually banks are ready and eager to finance all your construction costs including part of the plot of land.
Its an alternative to mortgage financing since one can comfortably secure funds within a short period, rather than to wait several months.
Bridging Finance / Property Development Finance
Bridging finance is a short-term finance solution often preferred by property developers and investors, which offers a swift way to finance the purchase of a property. The creditor will take the first charge on your property, and will pursue an exit once the loan has come to term.
A commercial mortgage is a loan given to a business entity to buy a saleable commercial property with the property as collateral. The loan-to-value ratio may be lower for a commercial mortgage, meaning the amount covered by the loan is less than the total value of the property. The rate of interest on a commercial mortgage is higher than on a residential mortgage. Commercial mortgages are usually amortized over 20 years or more and repaid in even steady instalments.
A long-term business credit that’s offered to property investors who have numeral rental properties. The creditor offers the ability to merge borrowing into one loan. The criteria for this loan is based on rental income.
Auction finance is designed for veteran property developers and landlords. It’s a way of managing to fund before an auction, so you know the property price and type you can finance before you enter the auction room. Property development is a stimulating, diverse, and multi-faceted sector to be involved in. However, the variety of ways and options to manage and fund a project can be a problem to navigate, especially if you have limited exposure. There are many other drawbacks to avoid too, and there will always be a certain amount of “on the job” learning to be successful.