So, you’ve done your research, you’ve weighed up the risks VS the benefits and the opportunities available, and you’ve committed to getting into property development.
Congratulations – you are on a prosperous path!
However, before you can begin your development, you need to secure the cash to purchase the land.
This can often be a difficult step for those who are just getting into property development since banks and other mainstream lenders are often cautious about lending money to first-time developers since they see this as high risk.
Is it hard to get a loan with bad credit?
A high credit score gives companies the confirmation that you have successfully borrowed and repaid debts on time in the past.
If you have a low credit score, you may be rejected by banks or mainstream lenders because you are deemed a high-risk client.
However, some private lenders can make decisions on a case-by-case basis, where they can discuss your credit history and come to an agreement moving forward.
Read more here.
What will the loan structure look like?
The 7 stage funding timeline for new build properties. Monies are released in stages:
- Loan to value (LTV): We lend up to 60%.
- Foundations: Access to the first stage of funding to begin work
- Wall Layout: After the foundations have been checked and signed off we release the next stage of funding
- Roof: The roofing and the shell of the buildings are completed and checked
- 1st Fix: Constructing walls, floors and ceilings, and inserting cables for electrical supply and pipes for water supply
- 2nd Fix: Final work from electricians, plumbers and carpenters
- Completion: The last funds are available to finish the property and prepare for the sale
How can I acquire funding?
Look for highly-esteemed and trusted property development finance lenders, like Hunter Finance, who have specific lending criteria that allow them to decipher what projects will be a good fit for the company.
- What to look out for when choosing a property finance lender:
- Experience in lending money for over 10 years
- Personal experience of property development
- Trusted experts in the industry
- Tailored loans to suit the individual needs of clients
- LightStream: This particular outlet offers loans for auto, home improvement and just about anything else, at low rates for anyone who may demonstrate a propensity for good credit.
- LendingClub: LendingClub is a peer-to-peer lending company, headquartered in San Francisco, California.