Residential Development Finance Advice To Get You The Best Deal

By: Sean Horton

If you are considering taking out residential development finance in order to get the right deal you should get the best advice possible. A specialist website will offer plenty of free information which relates to all aspects of development finance and will also find you the cheapest deal. A broker can use their connections with some of the top UK lenders to find you the cheapest rate of interest for your mortgage.

When it comes to development finance the mortgage taken out will differ from that of a normal mortgage. The lender will base such things as the rate of interest on the individual's circumstances. Factors that are taken into account include the assessment of the property you are buying and what you are intending to do with it among others. The loan will also depend on your credit rating. The better your rating then the lower the interest rate will be on your mortgage. As a very rough guide the rate of interest will be the Bank of England base rate plus between 1.5% and 2.5%. To some extent the rate will also be determined by how much experience the individual has in residential development. With the more experienced being offered the cheapest rates. The industry sector will also have some bearing on the rate.

When considering the terms of the mortgage then it can usually be taken between 1 to 25 or more years. Again this will be based on the size of the project you are considering and need development finance for. Residential development finance can be taken out as a fixed rate of interest or a variable rate. A fixed rate will allow you to budget better as the interest rate will remain fixed for a certain period of time. However the repayments will then go over to a variable rate and this means your monthly repayments could jump up considerably.

If you look at a variable rate then the rate will start off at a lower one than that of the fixed. However it will fluctuate in line with the Bank of England base rate. This means that if the rate goes up then so will your monthly repayments. However if it comes down then you will enjoy savings each month.

While the majority of long term residential development finance projects are taken out on an interest only basis you can also take out a repayment mortgage. The interest only mortgage will come with cheaper monthly repayments; however you do have to bear in mind that you will only be repaying the interest on the loan. When the term on the mortgage arrives you will still have to find the capitol you borrowed and pay this off in full. In comparison you will pay more each month for a repayment loan as you will be paying a little off both the interest and the capitol borrowed. However this means that when the mortgage reaches maturity you will have paid the loan in full.

By going with a specialist broker when it comes to residential development finance you are able to not only save a great deal of time but also money. While you will have to pay the brokers fees, the money they can save you by searching the marketplace on your behalf for the best deal more than make up for this.

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