Property Developer Loans

What is a property development loan?

A property developer loan is a type of finance used for a number of development projects, from light renovations to new building projects. Property development loans can vary in the amount borrowed, depending on what’s needed to cover the cost of work. Renovations may vary in scale, from aesthetic changes through to structural refurbishment such as incorporating new rooms and moving internal walls. Ground-up work can also be covered under the costs, which means starting with an empty plot of land.

Advantages and disadvantages of a property developer loan

If you're thinking of investing your time and money into property development, it's important to weigh up the pros and cons of the process to make an informed and responsible decision.

You should choose projects carefully as there's an incredible amount to consider when it comes to property development. From environmental health and public liability to potential delays to the project, you could actually end up investing far more into the development than you initially planned, and can potentially afford.

There are also benefits of obtaining a property developer loan. Getting the funds you need means you can take charge of your project and see it through from start to finish. Plus, if you plan to sell on the property once the development is complete, you could profit from the sale.

It's important to thoroughly research the market before you commit to a property development loan. Failing to keep up with the repayments can put your property at risk.

Development finance vs mortgage

There are key differences between traditional mortgages and development finance. To obtain a mortgage in the standard way, a lender would judge the value of a property and make an offer with that in mind, along with your eligibility criteria. However, a development loan is different - a lender judges the projected value of a property once the renovations are complete and offers to lend you a portion of that.

These two processes are very different, so if you’re unsure which one is best for your circumstances, it’s important to seek expert advice.

Applying for a property developer loan

When applying for development funds, you must provide detailed information to the lender so they can assess your situation, including the following:

• How much was paid for the property
• Renovation timescales
• Development costs
• Other fees

The lender will also ask for your personal details, including your income and current address. Then, they’ll proceed with your application, including a credit check. Even after approval, lenders will monitor your project spending while renovations take place.

It's important to note that this loan application process can be lengthy and will involve lots of paperwork. This is because the loan amount is based on estimating the future value of the property, which will take a lot of calculations.

Commonly asked questions about loans

Please see below for further questions about development finance

How much can I borrow with a property developer loan?

Each project and application for development finance is treated as an individual case. This means how much you can borrow entirely depends on the size, scale and predicted profitability of your planned renovations.

Can I get a business loan to buy a property?

If you and your business have outgrown your current office space, it may be possible to open new premises with the help of a business loan. A business loan can also be used to refurbish your workplace.

Property development loan details

Read our frequently asked questions about our loan products below. If you wish to find out more about our loans, simply call 0800 694 5566 to get in touch with one of our helpful advisers.

How long does it take to get approved for a loan?

Property development loan applications take time to process. Although you should receive an instant decision in principle on your loan, allow up to two weeks for your application to be processed.

The timeline for loan approval depends entirely on your personal circumstances. There are stages to the application process that you can begin online. After you’ve provided a few personal details, we'll contact you to discuss your requirements further and request further information on your loan.

Can I pay off a loan early?

If you're in a position to pay off the balance on a development loan, you can do so at any time.

There are a number of lenders who will charge you an Early Repayment Fee. Research these outcomes before you apply to ensure you're comfortable with the payment options.

How long are the repayment terms?

We have a range of repayment terms to suit your requirements, meaning you're able to spread the cost of your repayments from one to 30 years. As well as giving borrowers peace of mind and flexibility, it ultimately ensures you're as comfortable as you can be with your repayments.

What are the interest rates?

The interest rates will vary completely depending on your current circumstances and your financial history. As a broker, we will always shop around for the lowest interest rate.

Are there any loan fees?

Fees will depend on the type of product, and will be fully discussed - but as we’re a broker and not a bank, we receive a commission fee from the lender when a loan reaches completion. For some products, we may also charge a broker fee. This is up to 12.5% of the borrowed loan amount on secured loans and is capped at £3,995. On remortgages, the fee is up to 7.5% of the borrowed amount, capped at £2,000. We don't charge this broker fee on unsecured loans.