What type property development finance do you need? Mike Collins Mortgage
Mike Collins Mortgage Expert is an independent financial expert who often receives questions about how to finance renovations and property building. Mike has over 17 years of experience in this industry. He can provide advice to anyone looking to buy-to lease or kickstart large-scale projects.
“property finance is a general term that can be used to refer to many funding options, including bridging loans, or property development loan,” he stated.
There are many financing options for commercial, residential, and mixed-use project.
Mike Collins provides advice on the best ways to fund your property investment project.
Consider which finance options best suit your project
When property developers want to purchase large amounts of land or house buyers need to get started on renovations, they will often require financing. This often takes the form a short-term high interest loan.
Important to note, however, that eligibility criteria vary. It often depends on how strong your business plan is and what your personal credit scores are.
This type of loan provides a short-term solution for quick cash. You may find this loan useful if your dream house isn’t yet sold. You may need the cash immediately to buy a property on auction.
The bridging loan can also be used to pay for light refurbishments of your current property like plastering, decorating, or a new heating system.
This is an excellent option if you have a need for cash in a hurry. The money can be available within three days. While the interest rates are higher than those of other finance products, they can be affordable as they are usually short-term.
A bridging credit is available to you for the brief period that your property is sold and then you have the funds you need to repay it.
Home development loans
A property development loan can be paid out over time as a part of larger development projects. It is usually paid in installments like these:
- The purchase of a land development site is the first payment. It could purchase land for several new properties, or it could fund an existing property that has to be renovated.
- The second part of your loan will be used to pay any construction costs that are associated with the project. It can be repaid in stages, also known as staged withdrawal.
The loan is agreed upon and paid back via mortgage financing or by the sale.
This mortgage can be used to purchase a home and then rent it. Make sure you read all terms and conditions regarding subletting, letting, and other aspects.
Lenders may request a deposit between 25-40% for a residential mortgage. Additionally, you might be charged higher fees. Most of these mortgages are interest-only.
This type of finance, also known by the unsecured loan or a revolving loan, is not secured to your property or any other assets. This type of credit is fast and allows you to buy large assets, such as a house.
You can pay fixed repayments or you could pay the entire loan off by the due date.
Cash is the best way to finance your property development. As it can be avoided high interest rates, loans and other costs, cash is the best way to finance your property development. You can avoid debt by making deposits and paying as much cash as possible.