Development finance can be used for a range of projects, but the key to finding the right option lies in understanding the type of project you plan to undertake.
Development Finance London
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Unlocking Development Finance in London: Strategies for Growth
The economy is certainly better today than it was several years ago. The job market has stabilised, downward pressure on wages has eased, and property values have been on the rise in most major markets. However, there is no question that the economic environment is still much different than it was before the financial collapse of 2008–2009.
While the property market has experienced positive growth in recent years, financing remains constricted in many areas. Investors and individuals looking to purchase property still need viable development finance options, especially when they already own property but would like to move forward with a purchase before selling the property they currently own.
Bridge financing is certainly not a long-term solution you’d want to rely on for 10 or 20 years, but it can offer a practical path to access the funding needed for a purchase—while allowing time to secure longer-term financing. The terms are flexible, and rates are very competitive with other financing options. Bridging loans offer buyers the chance to move forward with future plans without being delayed by the timing of another transaction.
If you’ve had trouble finding bridging development finance that meets your needs and are interested in working with bridge financing experts, please contact us. We offer a wide range of options and always customise loans based on our clients’ individual needs.
We can now fund up to 75% of the purchase price and 100% of the development cost, subject to LTV restrictions.
Below is example from just one lender. Contact us for specific terms for yourselves. Loans over 4m rates of under 5% P.A available.
Fast Bridging Loans for Development Finance in London
Our bridging loans are designed to be flexible, whether you need funding for a property purchase, a development project, or something else entirely. We’ll work with you to tailor the loan to your needs, from the loan amount to the repayment terms, ensuring it fits perfectly with your plans.
Time is often of the essence, and we get that. Our team moves quickly to process your loan and release the funds as fast as possible, so you’re not left waiting around when you need support the most.
We believe in giving you flexibility when it comes to loan terms. Whether you need short-term funding or a longer repayment period, we offer a range of options to help you manage your finances and make decisions that work for you.
And don’t worry – you’re not in this alone. Our financial experts are here to guide you every step of the way, from application to approval and beyond. We take the time to understand your needs, ensuring the whole process is as simple and stress-free as possible.
Let’s talk about how we can help you…
Whether you’re looking for fast funding or need expert advice, we’re here to help. Reach out to us today and get started with a simple, hassle-free enquiry. Just click below to begin!
What is Development Finance and how does it work?
Development finance is a short-term loan used by property developers and investors to fund commercial or residential projects. This type of finance is typically used for ground-up construction or major property conversions, such as converting a house into flats or transforming a commercial building. It’s an ideal solution for property development, whether you’re looking to build from scratch or carry out substantial renovations.
When it comes to development finance, this is usually a 1st charge loan, meaning the lender holds the primary claim on the property in case of default. The lender typically funds up to 70% of the current land value and can cover up to 100% of the build costs. The funds are released in stages, aligned with key milestones during the building process, helping to pay your builder as work progresses.
It’s important to note that funding will never exceed 65-70% of the property’s value at the time of each funds request, ensuring both the lender and borrower remain in a secure position. Whether planning a ground-up development, a conversion project, or transforming a house into multiple flats or Houses of Multiple Occupancy (HMOs), development finance provides the flexibility and support you need to get the job done.
The difference between Development Finance and other types of property finance in London
The term development finance is often used interchangeably with bridging loan, but development finance has its own specific meaning. While the bridging loan is said to be a loan that bridges the gap between the pending dues and the funds being available, development finance for the property is more of a staged loan.
The money in development finance is released after the completion of each stage of property development. Another key difference between bridging loans and development finance is that the amount of funds arranged in 2nd charge development finance is much larger and for a longer time period than bridging loans.
What Type of Development Finance Do We Offer?
- New Property Development : When you’re looking to develop a property from the ground up, development finance could be exactly what you need. This type of finance can be tailored to suit your specific requirements, with funds being provided based on the cost of development. As a leading development finance broker in the UK, BridgingFinance4U offers a wide range of property finance solutions, working with a variety of funding partners across the country to help you get the support you need.
- Major Property Renovation: If you own a property that needs significant restoration work and hasn’t been well-maintained for a while, development finance could be the perfect solution. It can help fund a variety of refurbishment projects, whether you’re looking to convert apartments into office spaces, transform flats into penthouses, or take on other exciting renovation tasks. Whatever the project, development finance can give you the flexibility and support to bring your vision to life.
- Short-term Restoration Property: Short-term restoration property loans, often through bridging finance, provide quick access to funds for property repairs and renovations. These loans are ideal for purchasing properties in need of restoration, allowing you to carry out the necessary work before selling the property to repay the loan. Once the property is restored, the loan can be repaid from the sale proceeds.
- In all situations, BridgingFinance4U makes sure you have the property development funds available to you whenever you need them.
- Light Refurbishment : Works that fall under permitted development, works that require building regulation sign-off, Resi to HMO conversions up to 6 tenants, replacement windows, decoration, light central heating and electrical work, internal reconfiguration, full rewire, installation of new bathrooms and kitchens
Highlights
• Up to 80% LTV Net
• LTGDV 75%
• Rolled up interest
• Must have residential use day one
• No ERC (minimum interest 3 months)
• DIP decision fully underwritten by an underwriter day one
• Loans over £5m subject to bespoke pricing
• Below Market Valuations (BMVs) available
- Loans over £5m subject to bespoke pricing
- Must have a completion deadline before 30th April 2025 to qualify for 1.75% arrangement fee
- Heavy Refurbishment: Conversions such as large HMOs & MUFBs that require planning permission and heavier schemes of works
Highlights
• Up to 80% LTV Net
• LTGDV 75%
• Rolled up interest
• Must have residential use day one
• No ERC (minimum interest 3 months)
• DIP decision fully underwritten by an underwriter day one
• Loans over £5m subject to bespoke pricing
• Below Market Valuations (BMVs) available
- Loans over £5m subject to bespoke pricing * Must have a completion deadline before 30th April 2025 to qualify for 1.75% arrangement fee
- Heavy Refurbishment with Drawdowns : Conversions such as a house to flats or flats to house, commercial to residential projects, HMO conversions or permitted development projects.
Highlights
• Up to 75% LTV Net
• LTGDV 70%
• Works cost up to £1m
• Up to 5 Drawdowns
• Minimum Drawdown size £50k
• Rolled up interest
• We will monitor the drawdowns using a fixed fee scale for works up to £500k and the
cost will need to be covered by the borrower. For works over £500k bespoke pricing
will apply.
Fee scale for works up to £500k: (Initial report – £415.00 + VAT / Interim report –
£258.00 + VAT)
• Funds released within 24hrs of receiving the interim report
• Below Market Valuations (BMVs) available
- Loans over £5m subject to bespoke pricing * Must have a completion deadline before 30th April 2025 to qualify for 1.75% arrangement fee
How Much Can You Borrow?
How much you can borrow for development finance depends on several factors, such as your liabilities, the value of securities, the duration for which you need finance and your past record of successful development projects. You can use our free property development finance calculator to get an approximate rate.
- The initial funding will be processed based on the current value of your site.
- At last, the lender will agree to release a certain amount of funds of the total build cost, which is known as Loan to Cost (LTC).
- Then, the development finance lender will consider the total borrowing fund against the gross value after the project is completed, which is known as Loan to Gross Development Value (LTGDV).
Why Landlords in London Should Consider Using Development Finance for Property Refurbishment
You might wonder why someone would choose to buy a property that needs a complete renovation and refurbishing using residential property development finance. After all, you could simply buy a property in better condition and avoid the need for a bridging loan, right? Wouldn’t that be a better option?
For some, yes, it might be. The idea of buying a fixer-upper might seem unnecessary. But for others, it can be the perfect opportunity, and a bridging loan makes it possible.
Take, for example, those just starting out on the property ladder. Buying a property at an auction, or picking up something significantly cheaper because it needs work, can be incredibly tempting. They might stay with family or friends while they work on the property themselves, or, depending on the funds, hire professionals to do the job. This way, they can secure a much cheaper mortgage and a smaller deposit than if they bought a move-in ready home. Plus, they’ll end up with exactly the property they want, creating a place to enjoy for years to come.
This type of finance is also great for landlords. They can buy a low-cost property, convert it into flats, or refurbish it to make it more attractive to tenants – which in turn allows them to charge higher rent. The quicker the work is completed, the faster they can start earning from the property. A bridging loan can be key in ensuring they complete the work to the standard they’re aiming for, helping them get the most out of their investment in the process.
Using residential property development finance to buy a property that needs refurbishment can be a cost-effective way to create a home you love, though it’s not for everyone. For those who take this route, it offers a chance to save money compared to buying a ready-to-move-in property.
Alongside residential properties, there’s also finance available for commercial developments, including offices, retail spaces, hotels, restaurants, and sports facilities. Whether it’s a café or a large warehouse, the right development finance can make your project possible.
Securing development finance is easier with expert help. Lenders, including high street banks, offer loans based on factors like your creditworthiness and the project’s purpose. Be sure to factor in all costs, including arrangement fees and any potential exit fees. It’s essential to review the loan terms carefully, understand the repayment schedule, and ensure planning permission is in place. Proper research and professional advice will help you select the right loan for your project.
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