Property development is a popular and rewarding enterprise. Therefore development finance lenders work with a great deal of possible borrowers to evaluate lending opportunities.
A development finance lender will work with you to comprehend the viability of your project, and assess whether they could approve your application. They will be working together with other property developers like you. There is a formula to acquiring funds efficiently and successfully, which we will run through in this guide.
Read on below to find out more or get in touch – we would love to assist you with your application.
Be Totally Honest About Your Level Of Experience
If the development project you are presenting is the biggest you have ever worked on , that is alright. When it’s the first you have ever worked on , although options will be limited there will still be lenders who are happy to lend. If you have many projects going on in the background but cannot offer any specifics, or supply photographs of the construct or give any proof, then suspicions will certainly arise.
Lenders will assess everything that you put forward, therefore it is vital that you never overstate your experience or expertise. A development lender would prefer to lend to someone with less experience, but who is 100% honest, compared to someone who cannot support what they say.
Ensure that the Information Is easy to Understand
Although the numbers may be correct, if the data presented in the application is not in a simple format for the lender to understand, then you are making it more challenging for the development lender to approve your application. By using spreadsheets to present statistics or numbers, maintaining drawings that are clearly marked and scanned, and typing up all necessary written information free of mistakes will make your life simple.
When a lender is faced with several applications with an ever growing pile stacking up on their desk, you might well find that your application ends up at the bottom of the pile if the information is not immediately available.
The accuracy of the information passed to the development lender is of utmost significance. In the event that the lender is struggling to make the numbers add up, then your credibility is going to take a critical hit. Mistakes in the figures at an early stage might be the difference between an approved application or a decline.
Know your costs
The development lender will want to see detailed costings for the project broken down on a month by month basis. It is much better to create these at the outset of the process, instead of cobbling them together when requested.
For the lender the required draw down schedule is essential and is equally as important as the headline numbers, so be certain they are correct.
Lenders will normally wish to meet up with you throughout the application process and it is important that you know your numbers by then. Failure to carry out the required research by this point can mean disappointment.
Do not Over estimate potential sale price
There are lots of tools used by lenders to obtain an understanding of the potential sales price for your project. Although, a development finance lender might be initially impressed with the profit margins of your project, be aware that the lender will most likely know if they are overstated.
Initial checks will be completed to assess the likely values from comparable properties in the region. This may instantly flag up a problem. If you get through this check, the surveyor will mostly likely pick up the problem when writing his report. Inflated values will be a point of concern to the development lender, making your application less likely to be successful.