Member Article

Development Finance: The What, How, Who, and Why?

Depending on the specifics of your requirements, development finance could represent an outstanding avenue to explore. From established developers to first-time renovators to buy-to-let landlords and so on, development finance is provided for an extensive range of purposes and borrowers at a variety of levels.

Nevertheless, it often slips under the radar of many would-be borrowers, who may not even know of its existence. So with this in mind, we thought we’d clarify just a few of the most important questions regarding development finance and its mechanics.

What is development finance for?

In terms of “what”, development finance can be used to cover the costs, in full or in part, of almost any property development project. From the construction of new properties to extensive conversion works to renovations, enhancements, and extensions, development finance is, as the name suggests, suitable for most property development purposes.

How does development finance work?

Development finance differs from standard financial products in that the funding is released incrementally along the way, as and when it is required. Instead of the whole thing simply being paid out in one lump sum, the necessary pool of cash is available to the developer, though on a more gradual and ongoing basis.

Who Can Qualify for Development Finance?

In a similar vein to traditional loans and mortgage products, eligibility is considered in accordance with the unique circumstances of each applicant. More often than not, development finance is available only when the borrower is able to provide sufficient collateral to secure the loan and/or validate their current financial position and/or the guaranteed success or profitability of the project. It’s basically a case of proving to the lender that you can and will repay the loan in accordance with the terms and conditions set out.

Why apply for development finance?

Last but not least, the main reason to apply for development finance over and above conventional loans and mortgage products is the fact that it is a purpose-built product. Those who offer development finance typically have much greater experience and expertise in this side of the industry, facilitating the creation of tailored solutions to meet the exact requirements of developers. What’s more, the strategic development finance solution can also be easier to apply for, quicker to receive, and significantly more attractive in terms of interest rates and overall borrowing costs.

A Broker You Can Trust

Above all else, the most important thing to remember when considering development finance is the value of working with a broker you can trust. Not to mention an independent broker with no specific ties to specific lenders, service providers, or partners in general. Rather than advice and support that’s swayed by any kind of bias, you need to know you’re being provided with objective support. Not to mention access to the widest range of financial products possible, not just those that earn the broker the highest commission.

This article was provided by the team at Donkey Finance.

This was posted in Bdaily's Members' News section by iCONQUER Ltd .