Securing funding from various types of investors can be difficult in the UK property development industry. Especially if you’re new to the industry or you have an untested business plan. While it may seem like you won’t be able to find anyone willing to invest in your project, there are several things you can do to find funding sources that best fit your needs.
Here are 8 tips for securing development funding in the UK with ease.
1) Get Property Development Advice From Professionals
As you may have guessed, securing property growth funding in UK is no easy task. It can be difficult to get your project approved and a loan can take months to secure. If you are looking for advice from a professional, there are many sources available to provide you with assistance on this matter.
A good place to start might be speaking with an estate agent who will know all of the local developers and their requirements. Another option would be to speak with lenders directly. They may offer more practical advice than other types of professionals (i.e., lawyers).
Whether you are starting a business in development, or looking to expand your existing business, Finance Hub has the experience and expertise to help you determine the finance property development options that offer you the best chance of success.
Discover how we can help your business grow with the right funding by contacting us today!
2) Save Before You Get
To secure property development funding, you need a well-thought-out plan with a detailed budget. This will make you more attractive to potential lenders and investors. They will be more confident about the stability of your project because they’ll be able to see how it’s been thought through and planned.
Development loan lenders want to know that you have put as much consideration into securing finance as they are going to invest. They also want reassurance that they can recover their money should something go wrong or if your business is struggling financially during construction.
3) Choose Your Partners Wisely
Before you start to search for property development finance, it is important to think about who will be your partners in this process. Choosing a bank or lending institution that knows and understands the risks of this industry can help with securing funding.
If you are unsure which lender would best suit your needs, there are many online tools available to help you compare rates. Some lenders specialize in giving loans only for property development projects, while others offer more generalized loans.
Consider what kind of loan may work best for your particular project before starting your search.
4) Have Enough Equity In Your Home
The first step is to make sure you have enough equity in your home. To do this, work out how much your home is worth and subtract any outstanding mortgage or other loans from that figure.
The amount you are left with should be at least 20% of the purchase price of your new property. If it’s not, then you will need to get a second mortgage or borrow money from a family member to cover the shortfall.
You may also want to consider remortgaging your existing property if you’re struggling. You may need a large deposit. If you don’t have enough equity in your home, then lenders might require a larger deposit than usual – around 30%.
5) Know What You Can Borrow
To get finance property development, you first need to know how much you can borrow. A lot of people are surprised to find out that most banks won’t lend over 80% of the value of a property. They may offer you a mortgage but it will be at a higher rate. If you want to borrow more than this, it’s going to be hard work.
You’ll either have to save up more cash or get your house valued by an independent valuer and convince them it’s worth less than what you owe on it. Then there are other loans like UK bridging loans. These loans only last for 12 months and must be repaid as quickly as possible. So they’re not suitable unless you’ve got a specific project in mind with a tight deadline.
6) Keep Your Costs Down
One of the most important tips for securing property development funding is to keep your costs down. There are several ways you can do this, from finding cheaper materials to hiring more affordable labour.
Remember that these savings will make your project more attractive to potential investors and ensure that you have a better chance of getting a decent loan offer.
7) Persistence Pays Off in Getting Finance Property Development
The preferable rule for securing pr funding is to persist. When it comes to getting a mortgage, you must be organised. Additionally, you can provide as much information as possible about your income, expenditure and savings.
It also pays to stay on good terms with your bank manager. They may be able to offer advice or tips on how best to go about finding development funding in the UK.
In contrast, some types of property growth funding will require a personal guarantee from the individual seeking funding. It means that their assets would be put at risk if they were unable to repay.
8) Be Business-Like And Professional When Applying
The best way to secure finance property development is by researching and understanding the funding provider’s requirements. As well as demonstrating how your project will benefit them. You should also be aware of what you are offering, how much it costs, and how much money you will need.
For example, if you want to borrow £1 million from a bank, then you should have at least £100,000 in equity. Banks will require you to provide information on the type of loan, its purpose, and when repayments are due. They may ask for copies of documents like your credit report or financial statement too. Always read through the documentation carefully before signing anything.
Our blog post has given you some great ideas about how to secure finance property development in UK. When it comes to securing funding for development, you need to know your audience and tailor your approach. However, we hope that these 8 tips will at least help you get started on your journey to get property development loans in the UK
Securing funding from various types of investors can be difficult in the finance property development UK industry. Especially if you’re new to the industry or you have an untested business plan.