Property Development Loans

Development loans are for the development, redevelopment or refurbishment of residential, commercial or semi-commercial property:

• Small and large new builds
• Commercial and residential
• Conversion projects
• Major refurbishment projects.

We are pleased to inform you that whilst a number of the high street banks are currently not lending on property development our specialist property development brokers have access to a number of lenders who are. Lenders will consider proposals for both brownfield and greenfield sites, and on both a speculative and pre-sold/pre-let basis.

In the right circumstances our recommended suppliers could assist to arrange 100% of the total purchase and development costs, subject to availability and criteria. There is also an option for interest to be rolled up during the construction phase. Hence there could be no interest nor loan repayments due until the property is completed and either sold or re-financed.

Example One*

Mr H has planning permission to build two 5 bed executive homes on a plot of land.

• Current Mortgage                   £300,000
• Build costs                             £900,000
• Finance required                     £1,200,000
• Gross Development Value       £2,900,000
• Available profit                       £1,700,000

The high street banks will not provide the required finance to Mr H. He negotiates a deal which involves a builder providing the finance on the condition that they will split the profits 50/50 on completion. However, with the help of our recommended supplier he may not need to give up 50% of his profits as we could help to arrange the full £1,200,000 of required funding.

Example Two*

Mr C has planning permission to subdivide his garden and to build a 3 bed bungalow.

• Current Mortgage                    £0
• Build costs                              £145,000
• Finance required                      £125,000
• Gross Development Value        £275,000
• Available profit                        £130,000

Because of a small amount of adverse credit information picked up by the banks they were not prepared to finance this small development. Our recommended supplier could help to arrange the necessary finance.

Example Three*

Mr S, a small time contractor/developer, owns a 1950's bungalow with planning permission to demolish the existing dwelling and erect two 4 bed contemporary style houses.

• Current Mortgage                   £340,000
• Build costs                             £420,000
• Finance required                     £760,000
• Gross Development Value        £1,300,000
• Available profit                        £540,000

Our recommended supplier could help to arrange the full funding for the development. Mr S plans to sell one property for £650,000 and retain property two on a buy to let mortgage. He would then be left with a mortgage of £110,000 on a property valued at £650,000. The rental income would be an estimated £3,250 per month with mortgage payments of £460 per month. Thus Mr S could be left with equity of £540,000 and an annual gross profit of £33,480, minus legal and arrangement fees.

To find out more about how The Money Centre's recommended suppliers can help with your commercial investment mortgage needs contact us today or complete our request a quote online form today.

*Figures and calculations used are for example purposes only; please contact The Money Centre to arrange for one of our recommended suppliers to contact you for an individual bespoke quotation.