Property Developer Finance Needs Serious Consideration

By: Sean Horton

If you wish to develop residential or commercial property by way of expanding or building then you will have to give some thought to taking out property developer finance. Developer finance does not come with a set rate of interest like a residential mortgage. Instead the rate you will pay will be dependent on factors such as how much experience you have in the development field, the size of the project you are proposing and the type of project you are taking on.

There are many benefits to taking advice and help from a specialist. Of course they will offer advice freely and offer a huge amount of information on all aspects of property development. Along with this a broker can look around based on the information you give and then find you the cheapest rate of interest along with the best deal. A specialist will have access to lenders that you do not and will be able to team you up with a compatible one based on your individual circumstances.

When it comes to the interest rate then this will fluctuate greatly and can usually be between 1.5% and 2.5%. Of course different factors will affect this. The size and type of the project is one as is the type of project and the experience one has in property development. All lenders will also take into account your credit rating; if your credit rating is excellent then you will be offered the best rates possible. However a poor credit rating will mean that you pay a higher rate.

When it comes to choosing the term for your mortgage when looking for property developer finance a specialist can help you, a loan can usually be taken between 1 and 25 years or more depending on the size of the project. If you are taking on an extensive project that will cost a lot then you could be better off taking out an interest only mortgage. An interest only mortgage is cheaper when it comes to the monthly repayments; however this is due to the fact that you will only be paying the interest that has accumulated on the loan. This means that when the mortgage has been paid you will still have the capitol to repay in full. Some lenders ask that you can prove you have the resources before they will lend you the money.

If you choose to take a repayment mortgage then the amount you will repay each month will be dearer. However at the end of the mortgage you will not have to find a lump sum. This is because part of the monthly repayment will go towards paying the capitol and part the interest.

There is much to consider when it comes to property developer finance but there is help and advice out there. Choosing to go with a specialist will not only save you money but also an enormous amount of time. This is because a specialist will know from experience which lenders are more suited to your circumstances. They will then focus their quest for the best deal on these.

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