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Why Might I Need Development Finance?

Many building projects require development funding for a variety of reasons - but what exactly is development finance, is it useful, and could your current development benefit from it?


Throughout this blog, you'll explore just how advantageous property development loans actually are to a property development project.


Firstly, what is development finance?


Development finance is short-term loan funding that property developers use to help them complete a residential or commercial development project.


Borrowed funds can help you:


  • Purchase land

  • Afford construction costs

  • Pay material fees

  • Fund contractors and project managers


Ultimately, this cash injection helps to keep the development process in full swing, helping developers to complete their visions.


What projects use development finance?


Property development finance can be used by first-time and experienced property developers for a variety of different undertakings - this may include building properties from scratch (ground-up development) and refurbishing an existing property.


A residential development loan assists those working on private residential projects, such as housing, and flats. Student accommodation development finance is especially for those building new student accommodations.


A commercial property development, such as a gym, restaurant complex or storage unit can use development financing too if needed.


How can development finance benefit me?


Development finance loans are highly beneficial in the world of property development for several reasons - here are the main advantages property development finance can offer:


Quick access to funding


Unlike timely mortgage applications, property development financing is usually a short-term loan that can be processed and approved in a matter of days - meaning you can achieve a finished development quicker than you expected.


However, approval times can vary between lenders, so be sure to check this before you apply for development finance.


Flexible finance deals unique to your needs


With property development finance, loans are unique to each developer's needs - the lender will consider your project type and size to develop a customised quote.


What's more, to enable you to finish your project without a hefty debt, pre-payment structures can also be tailored to fit the development's cash flow, and aren't just a rigid loan with set payment dates.


You can complete your development on time, to the highest standard


Thanks to development loans, you don't have to cut corners or compromise on the materials used in your build. Instead, you can roll on full steam ahead and continue your work following your original plan.


Your new accommodation or commercial premises could even exceed your expectations and bring in more capital than you estimated!


You can focus on the task at hand before repaying what you owe


Development finance doesn't require monthly payments like traditional loans - instead, the interest agreed rolls up (roll-up interest), and you pay the capital and interest payments at the end of the loan term.


So, instead of worrying about payments throughout your project, you can just apply all your energy to completing it in the most efficient way possible.


Always use a trusted development finance broker


Be sure to do your research before selecting a lender - you want a broker that offers property development finance that is both reliable and greatly experienced.


To be certain that a development finance broker can be relied on, check that they're regulated by an official regulatory body, such as the Financial Conduct Authority - this way, you can rest easy knowing you’re dealing with an authorised firm.

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