Development finance is used as a type of bridging loan for either for the funding of a new building or renovations of properties. However, using development finance is used for more specialist work. It can be used in 3 ways, either for residential, commercial property or mixed-use. This is mainly aimed at experienced developers and limited companies. However, it is also available to smaller builders whether they be sole-traders or freelance.
It is normally required for you to have provable experience in developing properties, however, some of our lenders will look at the case if you have employed experienced professionals such as an architect or an experienced builder.
The minimum loan amount is £100,000, with some lenders having the maximum up to £50 million. Also, you may be able to get a 90% loan to cost on the loan as well as 70% GDV. In some cases, you may even be able to obtain finance that covers 100% of all build costs. Payments for this are normally paid in stages in order to reduce the risk to both you and the lender.
The term for the loan is typically between 6 and 18 months. However, some lenders will go up to 24 months for the term.