image of a house with coins and construction vehicles - for website J&J Commercial Finance Development Finance

Development Finance

Development finance can come in all shapes and sizes but is mainly associated with ground up, or conversion/extension of existing buildings.

Heavy refurbishment involves more than just aesthetic changes; it includes structural changes to the external walls such as demolition or rebuild to change the layout. This will normal require additional planning permission.

Ground up property development is the most intensive, and most often starts with just a plot of land. Funding can be used to assist with the purchase of land pre or post planning permission along with the associated build costs.

What type of experience is needed for ground up property developments?

Let’s take a look more closely at ground up property development, what is generally considered large multi-build projects. These types of projects are usually carried out by experienced builders or building company who already have a property portfolio. They buy the plot of land to build 5 or more houses. Experience gained in the past, even on a smaller scale will be considered by lenders.

If its your first development then options still do exist either by using an experience team and project manager or starting smaller and working your way up to the larger sites.

What is the process for getting Development Finance?

The first thing to do is to do an appraisal of the project. We’ve created a handy calculator that can be used for this that will give an indicative view of the profit margin for the scheme. This is often something that is overlooked, for the better finance deals lenders will be looking for approx 20% profit in the deal. It is possible to obtain finance with lower profit margins.

Other information that the lender will require includes

  • statements of assets and liabilities, income and expenditure;
  • bank statements;
  • your company accounts;
  • your property portfolio;
  • where you are in the planning process (full or outline planning permission) and;
  • the resale value (checked with an estate agent);
  • examples of previous developments and build CV.

Here at J&J Commercial Finance we are committed to providing free, no-obligation independent specialist advice. So, whether you are looking for a buy-to-let mortgage or a mortgage for a bigger project get in touch with us on 07399 660 002 or send us a message. We will get back to you straight away to see how we can help put you in touch with a lender using our network of over 250 lenders.