Property development finance is used for everything from a single house conversion through to large developments of over a hundred houses.
When a property is being developed, it is obviously not producing income. It is important to ensure that the interest is rolled up until the property is sold or refinanced.
Normally a property development finance lender will lend a percentage of the land value and a percentage of any professional fees and build costs.
This overall loan will also usually have a maximum percentage of the gross property development value or sales value.
For larger property developments the property development finance lender will appoint a project monitor, who will sign off at regular intervals during the build to allow each stage payment to be made.
Smaller property developments can have the stage payments signed off against an architect’s certificate.
All property development finance lenders view property developments differently. It is important to make sure that your development goes to the most suitable lender for the project.