When it comes to renovating an existing property or building a property then you need good, solid residential property developers advice from specialist. The easiest way to get this is by going online. There are specialist websites that will give information freely and help you to get the best deal when you are ready to take out financing.
Residential property developers just starting out can get confused when it comes to choosing the type of loan the need. A refurbishment loan is often mistaken for development finance when in fact they are not the same. With this in mind you will have to decide which type of finance you need for your particular circumstances. Basically a refurbishment loan is needed when there are small changes that need to be made whereas a development loan needs to be taken when the property needs extensive changes making or have a large scale project to work on.
Good advice is that if you need finance for anything above £150,000 then you should consider a property developers loan. If the figure you need to make changes falls well below this then get information relating to a refurbishment loan.
When it comes to the amount you are able to borrow for your venture it will be based on the individual. The lender will want to see your proposed plans for the renovations. Sometimes lenders will allow the loan to be figured on the value of the property after the changes have been made. The advantage of this is of course that you will be able to borrow more as the property would be worth more than in its current state. A specialist will be able to work with you when it comes to your proposal and this is often preferred by the majority of lenders.
Residential property developers can expect to pay a rate of interest which is based on their particular circumstances. There are many factors which are taken into account including the experience one has, how much value is in the property you are developing, what the proposition is and what you intend to do with the property in question. With the majority of lenders the interest rate falls somewhere between 1.5% and 2.5% above the base rate which is set out by the Bank of England.
The actual amount that you are able to borrow will be based on the proposal and your individual circumstances. However residential property developers will find that it is hard to get 100% funding for the project unless you have a great deal of experience and an established track record. You would also be wise not to try and seek a loan if you do not yet have full planning consent. Lenders usually turn down proposals that do not come with the relevant paperwork and documentation. Realistically you can expect to be able to borrow around 70% to 75% of the purchase price and building costs. A specialist will always be able to use their connections when it comes to getting the cheapest rate and best deal possible.
Sean Horton is a Director of Enhanced Wealth, a whole of market mortgage broker and IFA specialising in mortgage advice and the associated areas of income protection, mortgage protection, mortgage life cover and Residential property development .