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DEVELOPMENT FINANCE: EVERYTHING YOU NEED TO KNOW

Updated: Nov 22, 2023


development finance

Welcome to Approved Finance Group's Quick Guide to Development Finance. This comprehensive resource is specifically tailored to address crucial aspects and offer solutions to the most commonly asked questions we receive from our valued clients. Whether you're an experienced property developer or a business owner venturing into new projects, our guide aims to unravel the complexities of development finance and empower you with the necessary insights to make well-informed decisions.


Table of Contents

  • WHAT IS DEVELOPMENT FINANCE?

  • WHAT IS AN EXAMPLE OF DEVELOPMENT FINANCE?

  • CAN YOU GET 100% DEVELOPMENT FINANCE?

  • HOW MUCH DEPOSIT DO I NEED FOR DEVELOPMENT FINANCE?

  • HOW MUCH CAN YOU BORROW WITH DEVELOPMENT FINANCE?

  • WHAT ARE THE BENEFITS OF DEVELOPMENT FINANCE?

  • WHY USE APPROVED PROPERTY FINANCE?

  • HOW DOES IT WORK?


WHAT IS DEVELOPMENT FINANCE?


Development finance for commercial property is a type of funding specifically designed to support the construction or renovation of commercial properties. It provides developers with the necessary capital to cover costs such as land acquisition, planning permissions, construction expenses, and other associated expenses throughout the development process. Development finance is a short-term funding option, usually for between 6 - 24 months.


WHAT IS AN EXAMPLE OF DEVELOPMENT FINANCE?

Development finance differs from conventional home or business mortgages as they are disbursed in stages from a predetermined loan pool. Lenders generally cap their funding at around 70% of land purchase expenses and up to 90% of construction costs, ensuring proper risk mitigation throughout the development process.


CAN YOU GET 100% DEVELOPMENT FINANCE?

Experienced property developers with a proven track record of successfully completing comparable projects in the past can typically access 100% development finance. However, securing such funding may pose challenges for new developers or those seeking financing for smaller-scale projects. Lenders often prioritise the experience and track record of developers when considering 100% development finance options.


HOW MUCH DEPOSIT DO I NEED FOR DEVELOPMENT FINANCE?

The deposit required by lenders for a project generally ranges from 20% to 30% of the overall project cost, although this can differ based on the lender and project particulars. It's important to consult with lenders to determine the specific deposit amount needed for your project financing.


HOW MUCH CAN YOU BORROW WITH DEVELOPMENT FINANCE?

The borrowing amount is determined by the gross development value (GDV) of the completed project, representing its future market worth. Lenders usually provide financing of up to 60-70% of the GDV and up to 75-80% of the overall project costs, ensuring adequate funding to support your development venture.


WHAT ARE THE BENEFITS OF DEVELOPMENT FINANCE?

Development finance offers several benefits. Firstly, it provides the necessary capital to fund the construction or renovation of commercial properties, allowing developers to bring their projects to fruition. It offers flexibility in terms of repayment structures, helping developers manage their cash flow effectively. Additionally, commercial property development finance can be tailored to suit specific project requirements and can be obtained for various property types, including offices, retail spaces, industrial units, and more.


WHY USE APPROVED PROPERTY FINANCE?


Choose Approved Property Finance for your commercial development finance needs due to their expertise and reliable service. With competitive rates, flexible terms, and a trusted reputation, Approved Property Finance helps developers secure the necessary capital to fund their commercial property projects with confidence and efficiency.


HOW DOES IT WORK?


We keep our business finance options transparent - no hidden fees or nasty surprises. This is business finance made easy. Our no-obligation application won't impact your credit score.






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