Property Development Finance Brokers

If you’re looking for a loan to fund the building, conversion or refurbishment of a property, you’ll need what’s called development finance. With fewer lenders available and a lot of extra paperwork required, this type of borrowing can be trickier and more complex to apply for.

This is where an experienced broker who understands the nuances of the whole process can make a huge difference. By reading this guide, you’ll have a better understanding of the support such a specialist can offer and why they’re best placed to help in this situation.

What is a development finance broker?

This type of broker is experienced and knowledgeable in obtaining financing for people who are looking to buy and then build or develop a property, either for residential or commercial purposes.

Whether you want to construct a seaside home on a piece of land, renovate an existing structure like a factory or convert a derelict building into flats, a specialist broker will be able to assess your financial situation and source a lender you could apply to for this type of loan.

How exactly can they help?

If you’ve got a site in mind, you need to get your development finance loan secured as soon as possible so you can purchase that space and get building. You don’t want to lose days or even weeks looking for, and then applying to, a lender who could reject your application. A development finance broker can take care of all of that for you, speeding up the process and increasing your chances of getting the loan you need. The ones we work with are able to:

• Advise on whether the construction work you want to do qualifies for a development finance loan. It could be that an alternative such as a self-build mortgage, bridging or business loan, or mezzanine finance would work better. They’ll also consult on whether the amount you’re asking to borrow seems in line with the building plans you have – typically you can borrow upwards of £50,000.
• Share tips on how to improve your eligibility and reliability in the eyes of a lender, including how to offset bad credit, a small deposit or lack of development experience. Paragon, for example, prefers to work with experienced developers rather than novices.
• Consult on whether you have a viable exit strategy for paying back the loan – this could be through the sale of the property once complete or by remortgaging onto a residential mortgage – and how long you should take the loan for. Anywhere between three months and three years is usually possible.
• Compare the whole market, including specialist lenders, to source the best development finance loan for your circumstances. Often brokers get access to rates the general public wouldn’t and, in this situation, specialist lenders are likely to offer better rates and terms than a general mortgage lender.
• Assist in putting your mortgage loan application together. This type of finance requires the submission of building plans, valuations, estimates for the property’s sale or rental, a timeline, development appraisals and details of experience in development.

The cost of a development finance broker

All of this support tends to cost 1% of the loan you’re looking to acquire. So if you’re looking to loan £100,000 you could expect to pay a broker £1,000. Others ask for a flat rate of £500.

Regardless of the amount, it’s common for a broker to ask that at least a portion of the fee be paid at the start of the engagement and the rest at loan completion. In the unlikely scenario you’re unable to get a loan, most brokers will be happy to offer a refund.

For a first time consultation with one of the development finance brokers we work with, there is no cost. After that, should you choose to engage in some longer-term support, the broker you’ve been matched with will share details on the exact cost and payment arrangements.

Specialist development finance broker vs bank or general broker

As an extra cost to an already pricey process, it can be easy to dismiss working with a specialist broker as an unnecessary luxury but in this scenario it’s almost always vital to do so. The table below provides a good summary of why this is so important.

Most high street banks don’t offer development finance, which means you’d need to apply to specialist and private lenders. These types of lenders tend to only operate via brokers and even if they don’t it’s useful to have one experienced in such finance to negotiate the terms on your behalf.

While you could engage a general broker, working with one who obtains development finance for house builders on a daily basis will improve your chances of getting a great deal.

Other benefits of engaging such an expert versus applying directly to a bank or working with a general broker include:

• Saving time: A general broker would have to do their research to find a lender open to offering development finance whereas specialists already have such a list at their fingertips. That includes those who might offer loans to people with bad credit, those who are self-employed or lack property development experience.
• Bargaining power: Specialist brokers know what constitutes a strong application as well as good terms and interest rates. They can make sure yours measures up while also taking on the negotiation of any terms on your behalf.

Get matched with a development finance broker

Pursuing the development of a property in any capacity is a complex process. A development finance advisor can be the difference between getting such a project off the ground and having it remain a pipedream.

Whether you’re going down the commercial or residential route, looking to get a loan with bad credit or developing for the first-time, our extensive database of brokers means you can be matched with someone who has the expertise required to get you the loan you need for the property you’re looking to create.

Call 0808 189 0463 today or enquire online to start your development journey and get matched to a broker for a free, no-obligation consultation.