Many people find it challenging to raise property development finance because they don’t have money readily available or access to cash. According to Tim Archibald, it is crucial to understand property development finance and explore various options to leverage the available resources and opportunities.
Tim Archibald Christchurch says property development is a complicated industry. Without knowing the rules and regulations set out by the financial conduct authority and a solid strategy, you may not achieve your goals. Therefore, today’s article will explain property development finance based on Tim Archibald’s valuable research, experience, and insights. Read on!
Table of Contents
What is Property Development Finance?
Whether you are a homeowner looking for renovations or running a property company and need to start developments, you will usually use financing. Although financing happens in various ways, the most common ones take the form of short-term and high-interest loans.
Construction projects, such as basement or loft conversion, use property development finance. On the other hand, people can use it for securing a plot of land. Some funds also contribute toward residential properties, meaning buildings for shops, offices, and others found on the high street won’t qualify.
Some property development finance options support commercial developments and mixed properties. Because there are numerous sources of development finance, the eligibility criteria vary. For example, some lenders consider your personal credit score, financial conditions, business, company’s operations (if any), and day-to-day analysis.
Bear in mind that eligibility plays a critical role in property development finance. Therefore, it is crucial to consider this factor before applying for a property development loan. That way, you will know whether you are better suited to a specific source over other options available.
How Does it Work?
According to Tim Archibald, it is critical to decide the finance property development route that aligns with your situation or specific requirements. Perform thorough research and determine how much you need to carry out property renovations or remodeling.
Remember, this depends on the amount you want to borrow and various other factors, such as your house’s current value, your proposed development cost, and your property’s expected value. Tim Archibald says your existing house’s value is determined via the valuation report about your property and the current market.
Likewise, the cost of your proposed development means whether you want to carry out a simple renovation project, heavy remodeling, or ground-up development. Lenders offering loans or amounts vary without any specific parameters.
However, it is usually up to 100% of the development cost. Besides, consider the fees involved with taking out finance. Lenders usually subject loans to interest rates and other fees, depending on the loan term and borrowed amount.
Moreover, you can pay back the borrowed money in full when you sell the newly developed property. The other option to pay back the loan is smaller increments over a predetermined timeline. Therefore, it is wise to research and choose a funding route that suits your particular needs.
What are Property Financing Options Available to Developers?
There are different financing options available to developers, such as cash, bridging loans, specialized property loans, buy-to-let mortgage loans, buy-to-sell mortgage loans, and personal loans.
For example, cash is the easiest way to finance your property development project. It prevents you from relying on loans and interests, streamlining the entire process and keeping the development economical.
So, make sure cash is your number one priority when sourcing income for your development project. However, if you don’t have cash available to get the job done adequately, you can look for other options.
Property Developer Tim Archibald recommends a buy-to-let mortgage that allows property owners to rent the entire resident or a few rooms. The eligibility criteria for this type of mortgage may vary from the standard residential mortgage.
Most lenders require 25% to 40% of deposits. Therefore, find a lender that offers more reliable options. A buy-to-let mortgage usually operates on an interest-only basis. On the other hand, people looking for a faster turnaround after property renovation can go for a buy-to-sell mortgage.
Although the buy-to-sell mortgage usually comes with higher fees and a large deposit, it offers the developer or owner the flexibility to sell their properties when they are ready. So, there are plenty of options to consider when looking for property development finance/funds.
Final Words
Property development finance plays a critical role in funding residential and commercial projects. It covers many things, including personal loans, bridging loans, mortgages, loans, etc. It is vital to understand the basics of property development finance explained in this post. That way, you can make the most out of your project. Until next time!
