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Getting 100% Property development loans is widely regarded as being one of the more specialised finance products and popular. It is possible to find a property development lender who will help, but they do have some important finance criteria which must be met.
The scheme has to exhibit a substantial return on investment. It does not matter if it is a refurbishment or development scheme, but either way the developed value will need to show at least 25% return on costs. For a simple guide simply add together the purchase price and development (or refurbishment) costs then multiply by 1.25 Therefore if a site costs 200,000 and the development costs are 33,000 the total costs are 233,000. The developed value would then need to be at least 295,000. naturally this is a very rough guide but it does give a decent idea.
The next major question that a property development lender will ask is "why is the developer asking for 100% Property loans?" Although it is not unusual for a property developer to have all their available capital tied up in one project whilst looking for a new scheme, there are a number of other acceptable answers. The challenge comes when a developer asks for high levels of finance with no provable experience and little support.
Over time a property developer will build a team of professionals to back them up, this will consist of suppliers, trades people and specialists such as architects, quantity surveyors and solicitors. This team becomes an asset and a experienced team can go a long way towards convincing a property development lender.
Some specialist property development lenders will work with banks to provide "top-up" finance. The result is 100% development funding, but from two difference sources. However there are also some property development lenders who will lend all the funds. Either way 100% property development finance can be a very specialised form of lending and using a specialist finance broker can make a positive difference.