Development Finance for Properties: The Basics
Several loans exist that help homebuyers and investors purchase and build properties. Property development finance is designed for applicants looking to develop more than one dwelling on one title.
Whenever a property doesn’t exist yet, lenders exercise additional caution. At least half of property construction projects don’t make it to the finish line. This puts the lender in a predicament.
Residential and commercial projects qualify for this finance option. Lenders consider the amount needed, the length of the loan, and the project’s hard costs. Moreover, the lender explores the project’s feasibility.
Many projects sound exciting. They also look great on paper. However, the market conditions might indicate something different. If a solid supply of mixed-use properties already exists, adding another poses a risk. Sometimes the project is on the verge of completion but the owner realises that the units don’t have interested occupants. If there is no income on the horizon, it impacts the owner’s ability to repay the loan.
Property development finance is available at a fixed-rate and variable rate. Keep in mind that the fixed-rate portion remains that way for the first few years. In some cases, it’s only one year. In others, it goes up to five.
Our Mortgage House loan specialists cover the details and home loan interest rates with the applicant. They go over the items needed to apply and what to expect during the process.
Development Finance Conclusion
To obtain property development finance from Mortgage House, contact our loan specialists. They can discuss the details of the financing with you.