A property development loan can be used to purchase land, build new developments and renovate existing ones. Terms of up to three years are available (our broker offers terms up to 18 months) and they are suitable for large developments as they offer high loan-to-values. Payments are usually released in stages, in line with the progression of the development. Once the development is complete, you can exit the property development loan and move this to longer term finance or sell the development.
To have the best chances of being accepted for a property development loan you should have:
- A proven record of successful developments in the past
- Agreed ‘off-plan’ buyer(s) or;
- Can show that the development will service a strong rental demand where the building is speculative
- Already own the land and have planning permission
You can find pre-planning development loans, although these will have higher rates of interest and you may need to be a more experienced developer.