If done right, property development can be rewarding. However, to get the most out of it, you must try to avoid all the major pitfalls associated with property development projects such as running out of finances before completion.
Finance is arguably one of the most important factors of property development. If a project is started without enough finances, it can lead to a major disaster. Securing enough funds is therefore important to ensure a smooth running of your construction project, which as a result will lead to huge profits upon completion.
You need to establish how much money you can borrow and how you will be able to manage all the associated costs of the project.
One way to ensure a smooth running of your projects is obtaining Property Development Finance.
What is Property Development Finance?
Property development finance is a type of funding for new building projects, comprehensive renovations, redevelopments, or general refurbishments. These finances are suitable for residential, commercial as well as mixed-use property developments.
Whether you are an investor, property developer or a landlord, obtaining property development finance can help prevent the common pitfalls that many people fall into- that is running out of funds before the completion of the project. Securing the finances can ensure a smooth running of your development project.
The finances are flexible and affordable and can be repaid after the sale of your developments. If you intend to keep some of your finished properties from the projects, it’s possible to repay the development loan by refinancing the properties to a long-term investment loan.
Types of Property Development Loans
Various types of property development loans are available and you can choose one depending on your specific needs.
• New Construction Loans
If you wish to develop new properties, you should consider taking the new construction loan. This type of property development loan works on a progressive drawdown basis; which is in line with your building contract. The loan is drawn in stages in accordance with the fixed price of the property.
These stages include Deposit (if applicable), Base stage, Frame stage, Lockup stage, Fixing stage, and completion.
• Refurbishment Loans
Refurbishment loans are available for property developers, investors, and landlords looking to upgrade mixed-use or tired residential or commercial property before renting it out.
The loans are provided depending on the kind of property refurbishment. This can be light refurbishment where no building regulations or planning permissions are required and where there is no real change to the nature or overall use of the property.
The other type is heavy refurbishment where building regulations or planning permissions are required and where there are structural changes to the nature or overall use of the property.
• Conversion Loans
These loans are available for those looking to purchase property that needs significant renovation or converting an old building such as a barn.
Converting property is meant to bring it to a modern level and significantly add more value.
• Mixed Residential and Business Property Loans
Mixed residential and business property loans are available for property investors and developers who are looking to develop property that is designed to allow for more than one use.
• Bridging Loans
Bridging loans are available for those who want to buy new property while waiting for the existing one to sell. The lender provides the loans on the basis that the existing property will be sold within a specified time frame.
The TIC Finance Process
Step 1: Enquiry about the financial options available: Once you identify a suitable property development project, contact TIC Finance to discuss the finance options
Step 2: Indicative Terms: TIC Finance will provide you with indicative terms after your first enquiry. This is usually within 1 hour of your enquiry. If the terms are attractive to you, then you can go ahead to the next step.
Step 3: TIC Finance will provide an outline of their finance and charges in the agreement principle.
Step 4: Someone from TIC Finance will visit the property development site to gather evidence of the existence of your intended project and to discuss the project further. TIC Finance will provide a valuation report of your project which may include its current condition, cost estimation, and expected market value.
Step 5: The loan application will be underwritten by TIC Finance as a confirmation of the exact terms of the loan, including all the costs involved.
Step 6: You (the borrower) sign all the necessary documentation
Step 7: The funds are released in as little as 48 hours, although it may take longer in some cases and depending on the complexity of the deal.
Common Reasons Why People Need Property Development Loans
The property finance market in Britain is on the rise one again due to a number of reasons.
One, property developers are currently working on a massive number of new homes since the financial crisis.
Two, rental incomes are expected to rise by over 21% over the next 5 years.
Three, home prices are expected to increase by 25% over the same period. Although this prediction stands changed after Britain’s exit from the European Union.
Four, commercial rental growth is generally rising across the UK.
As a result, many property investors, developers, and landlords are looking to diversify their portfolio in developing new constructions or revamping properties with the intention of selling them at a profit upon completion.
The lack of finance however hinders them from achieving this, prompting them to obtain property development finances.
There are different types of property development loans available for developers who are looking to build new constructions, upgrade old and tired looking properties with the intention to increase their market value, purchase and convert buildings such as barns to other uses, develop properties that can allow for more than one use, and purchase properties while waiting for the existing one to sell.
TIC Finance- For Fast, Flexible and Affordable Property Development Finance
If you are looking to raise development funds for long or short periods on residential or commercial property in the UK then TIC Finance can help. Whether this is your 1st or 20th development our company will secure any funds ranging from £25,000 to £30 million
We have been in this market for a very long time and understand the urgency in acting quick, as time is money. At TIC Finance, we have a wide range of funding solutions that can be readily available; these vary from private investors, wealth managers and private banks.
Our lending facility is very unique and incredibly simple. This allows us to offer flexible finance options at a speed which caters to your circumstances. We have an in house team who solely specializes in development finance with decades of experience and knowledge. Our individual approach makes our processing time faster, quicker and more efficient than our market competitors.
TIC Finance can guarantee that we will take the stress out, as we will guide you and secure the best finance package to suit your needs.