How do property developers raise finance?

There are several options available to a property developer in terms of raising finance, below we list a few:

  • Re-mortgaging – essentially this would mean re-mortgaging your property, in this instance, we will assume the property has substantial equity which can be re-mortgaged. This option should be considered thoroughly, and you should have a good grasp of your project and have carried out the appropriate property appraisals.
  • Further advance – This in a nutshell is asking for an advance from your existing lender. The rates for this tend to be higher, and in the long may not work out to be as profitable.
  • Mortgage – commercial mortgages are available for many sectors, also depending on experience will determine the level of lending and terms. These come under the categories: commercial premises purchase, second-charge, cash injection, and buy-to-let.

However, it is important to note, that there are many other factors to consider when taking our development finance, such as understanding costings and having the appropriate contingencies in place. There can be quite a lot to have in place and get right when securing development finance – this is where having a good mortgage broker on your side can help you immensely.

Essentially there are many types of projects that some would want to raise development finance for, these can range from ground-up developments, light / heavy refurbishment properties, and properties purchased at auction.

A key thing to remember with any mortgage is key advice from the FCA (Financial Conduct Authority) “your home may be repossessed if you do not keep up with payments”.

Journey Mortgages is a specialist broker that can help you with development finance and more. Get in touch, and one of our friendly team with be happy to help you with your enquiry.

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