What is needed when applying for Development Finance?
08 April 2024
Do you know what is needed when applying for Development Finance?
You’ve found the perfect site! You’ve spoken to your professional team and it looks like it will work. Now you need finance. Where do you start?
Here is a list of the minimum amount of information we would need to be able to assess the deal and then speak to funders to get terms for you.
Development appraisal
This lists the total cost of the build, including all purchase costs, construction, contingency, professional fees & sales/refinance costs. This is one of the most important documents and needs to be as up to date as possible. We have a template that we can send if you need one
Cashflow
At this stage it will be estimated but discuss with your contractor and see what their payment terms are. The cashflow will change as it gets closer to the build and also throughout the build (weather & suppliers) so you need to ensure it is kept as up to date as possible
Accommodation schedule
A document that shows the lender of the number of units, number of bedrooms, living rooms, parking and the size of each unit.
Property Bio/ CV
A CV will prove your experience within development loans. It might be that this is your first build or it might be your 30th. Let the lender know what you have been involved in, including details of the properties, profit made and if you built on time and within budget. Don’t worry though if you have gone over budget and term, there have been many that have in the last few years. It won’t go against you, the lender will just want to understand what happened and what you did to rectify it. If it’s your first build, let the lender know if you’ve been involved in any property related transactions, did you buy your own home and totally renovated it? Maybe a small investment property that you refurbished? Anything helps.
Asset & liability statement
The lender needs to see that you have something behind you should the deal go over term and, say, the interest needs funding or you need to fund any cost overruns. We have a template we can send if you need one
Details of the site/property to be purchased
This includes the full address, any planning decision numbers and any plans that have already been drawn up.
Exit Strategy
Will you be selling or refinancing to a commercial/buy to let loan? If refinancing, what comparables can you show for the expected rental income? If selling, do you have any comparable properties in the area that have sold for the price you are expecting?
It might seem like a lot but once you prepared all this once, it will be easy to update for any other development deals you need financing.
If you have a development deal you would like to discuss, why not get in touch?
Call Michelle on 07739 797 687
