Property Development Finance Lenders

Development finance lenders have been hard to find in recent years, although there has been talk of an improvement in the availability of property development loans over the last year or so.

Property development finance is the term that lenders use to mean the funding that is provided to property developers to finance the projects they undertake. These projects can be wide-ranging in nature from refurbishing a residential property to rent out or resell, to completing an entire new-build scheme.

The amount available to borrow will often be separated into the purchase cost of the property and the cost of development. One of the difficulties faced by potential property developers is raising enough money to finance the entire project, as often loan to cost percentages can be lower than you might need. The projected value of the completed project will be taken into account but typically only 55-65% of the total costs will be available. If the property is already owned, or if you are an experienced developer, it might be possible to borrow 100% of the development costs.

Another factor to consider is the length of the project. This type of lending is usually short-term and so the lender does not have much opportunity to earn interest on the loan to offset its administrative costs. If the term of your loan is short, you can probably expect to be charged a reasonably high lending fee.

Development finance lenders can be banks but there are also some specialist property development lenders. These specialist lenders might consider higher loan to value percentages than most banks.

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