We specialise in providing property development finance solutions.
Our panel of development finance lenders provide high quality and prompt decisions. Indicative development finance terms will normally be provided within 24 hours. An agreement in principle can normally be expected within 48 hours, once the initial application form has been processed.
We work closely with our funding partners, solicitors, valuers, lenders and other intermediaries to ensure a prompt and efficient turnaround.
Was struggling to secure finance for my next commercial to residential project and was about to give up when an associate recommended that I talk to CMB. Several weeks later and my finance was in place and I secured the project and it is now well under way. Really pleased with the service. They are educated experts and I would definitely recommend them. I look forward to working with them on my next project.
Development finance loans tend to start from around £150k, up to £200m.
A development finance loan will normally be made up of two distinct parts, the first of these is the purchase loan to buy the site, this is follow up by the development facility which will finance the build costs.
Most development finance facilities will roll up the interest, meaning that it is repayable at the end of the term. A development finance facility is normally either paid back by sale of the units which have been built, or alternatively through implementing a refinance facility normally with a term loan. The final option is a development exit loan which enables a developer to have more time to sell their units once the development finance facility has/or is due to expire.
Development finance facilities are normally secured within 4-6 weeks of the initial enquiry.
Development finance loans typically start from a minimum of 12 months, with maximum terms of around 3-5 years depending on the type of facility that is required.
Development finance facilities generally cost around 6-10% per annum, although they may be more expensive if the developer is seeking a higher loan to value (LTV) or higher loan to cost (LTC), or finally a higher loan to gross development value (LTGDV), plus acceptance fees, plus solicitors fees, plus valuation fees.
We regularly facilitate development finance facilities for the following types of developments:
Development Finance Costs will vary depending on the loan to gross development value (LTGDV) that you require, typically the higher the loan amount against the gross development value the higher the cost of funding. Rates typically start at around 6% per annum.
Additional costs that investors and developers need to consider include:
A development finance loan is normally a relatively short term loan, with normal terms ranging from 12-36 months depending on the size of the construction product. A development finance facility is a type of mortgage, although has some different characteristics.
The lender will underwrite the development facility and they will be evaluating the following elements:
The lender will provide terms based upon a loan to gross development value (LTGDV), this is the maximum amount that they will lend against the future value of the site, most lenders will typically go up to 65%-70% LTGDV, i.e. they will lend a maximum amount of 65% of the total future value.
LTC – the maximum amount that the lender will advance based upon the costs.
The lender will normally appoint a monitoring surveyor, this is paid for by the developer, the monitoring surveyor will visit the site at various points to make sure that the site is being built to acceptable standards and the construction methods being used are acceptable. The monitoring surveyor will ultimately sign-off on releasing funds to the developer once various stages are achieved.
There are a couple of different types of development finance loans, these include:
During the development process the lender will normally agree to release capital at a number of different points in the development cycle, these are in brief:
Then the lender will normally agree a schedule of payments, which may be monthly based upon continued progress, there are a few other milestones which the lender will also consider:
The development finance lender will normally take a “first charge” over the development site, this means that if the terms of the loan are breached that the lender will have the right to enforce their charge, meaning that they can ultimately take ownership of the property, much like a mortgage lender can if you do not keep up repayments.
A development finance loan can enable a developer to build out a development project reducing the amount of capital which they will need to contribute to the scheme. Most development finance lenders will provide indicative terms relatively quickly, with 24-48 hours.
Development finance rates have reduced over the past few years, depending on the size of the development facility required it is possible to secure development finance facilities from around 6% per annum.
At the beginning of the development finance project the lender will want to understand what the developers exit strategy is. The lender will review the application thoroughly, and have valuations carried out in advance of them lending the funds to the developer. The developer has two real options: