What is Property Development Finance?

What is Property Development Finance?
June 21 18:45 2018 Print This Article

Property development finance refers to financing options that are available for building new properties or renovating existing ones. Generally, it can be used for single family residential, multi-family residential, commercial, institutional, and hospitality properties. Nowadays, property development finance has become the backbone of most successful development projects as it offers developers great opportunities to develop properties irrespective of their finances.

When it comes to developing a property, there is usually a need for money to be available at the disposal of the property developer. However, most traditional financial institutions are usually unwilling to provide the funds required to take care of the pressing needs of developing properties. Therefore, most property developers often turn to property development lenders to finance their properties.

Types of Property Development Finance

There are different types of property development finance that can be used by property developers, and they include:

  • Property Finance

Property finance is an all-encompassing financing option that assists properties developers to cover the costs of building and developing properties. It has proven effective in helping developers to develop properties that they will put up for sales later. Property finance can provide funds to cover the cost of land purchase, construction of the buildings, professional costs, utilities, and other essential costs. The flexibility of property development finance affords property developers to customize the conditions of the financing package to suit their unique needs.

  • Property Refinance

Sometimes, due to the failure of the original lenders or changes in lending terms or market, there may be a financial constraint while a project is going on. Resultantly, property developers may need to get new lenders that can help them develop their properties under development, and this is where property refinance comes into the picture.

Whether property development finance comes in form of property finance or property refinance, there are different choices of property development finance you can consider.

  • Commercial Mortgages

To purchase commercial properties such as warehouses, offices, and shops, commercial mortgages are some of the best options for property development finance. With the aid of commercial mortgages, you can finance your properties by spreading the cost over several months or even years. This financing option will reduce the burden of building or developing properties.

  • Bridging Finance

Bridging finance is a short-term financing option that assists property developers to cover the costs of developing properties. Bridging finance has proven effective in helping developers to develop properties that they will put up for sales later. It can provide funds to cover the cost of land purchase, construction of the buildings, professional costs, utilities, and other essential costs.

  • Auction Finance

Another important method of developing properties is auction finance. This works in a simple way – after you have won an auction bid, you will be required to finance the auction properties within a month or less. Therefore, a fast method of financing the properties is required. In such case, property developers can utilize auction finance to buy the properties.

In conclusion, there are various property development finance options that property developers can utilize to fund their properties. To explore these various finance options, visit www.1-co.uk.

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