Mortgage For Property Development Use

By: Sean Horton

When looking for a mortgage for property development and want the cheapest rates of interest then use the experience of a broker. A broker will be able to work alongside you from the very start to the end of your venture whether you are looking for a commercial or residential development loan. While they are able to search the whole of the market place which you do not have access to, for the majority of time they will know from past experience which lenders are most suited to your particular needs.

A mortgage for property development will be tailored to the specific needs of the individual. This means your experience in property development will be taken into account when it comes to the rate of interest you will pay; typically you can expect to be offered a rate of around 1.5% to 2.5%. Not only is experience taken into account but also the proposed plans for the mortgage and the sector at that time.

Getting a lender to finance your project 100% is extremely difficult. The majority will offer 70% to 75% and this will be based on the size and type of project, the assessment of the property and what you intend to do with it. If you have a lot of experience in the development sector and can show success in the past then a broker may be able to find you 100% when looking for a mortgage for property development.

One of the most important points that all property developers should remember is to wait for financing until they have got all the necessary planning permission. A lender will want to see that you have clearance in your proposal and very few will lend you any money if you are waiting for permission to go through. By choosing to look for financing without it you could be wasting your time and that of the broker.

When it comes to the term for the mortgage then this can be anything from 1 year to several years. Again the size of the project will be taken into account. A large project that needs hundreds of thousands of pounds would probably be taken over 20 years plus and be taken on as an interest only mortgage. A property development mortgage can be taken as either a repayment or interest only. There are advantages and disadvantages to both.

The interest only mortgage will come with cheaper payments each month. However the repayments will only be taken off the interest that occurs on the capitol. This means that when you have paid the full term of the mortgage the capital will still be outstanding and you will have to pay this off in full. Most lenders will want to see proof you have the money to do this before they will agree to the mortgage.

If you take the mortgage on as a repayment then the monthly repayments will be dearer. However the advantage over the interest only is that you will repay both the capitol and interest during the term. If you need help when choosing a mortgage for property development then a specialist website will offer this by way of articles and FAQs.

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