Property Development Mortgages Can Be Found Cheaper Online

By: Sean Horton

If you are considering getting quotes for property development mortgages then give some thought to going with a specialist when it comes to getting your quotes. A broker will work on your behalf to make sure you get a loan which will be tailored to your specific needs. A property development mortgage is unlike a residential mortgage. There is no set rate of interest but instead it will depend on the individual's circumstances.

There is a rough guide to the rates that the majority of lenders offer. This is usually somewhere between 1.5% and 2.5% above the Bank of England base rate. Factors that will determine this will be what you are intending to do with the loan you are taking and how much experience you have in the property development business. By working with a broker you will be assured they will search with the entire market place of lenders to secure you the cheapest loan. However in the majority of circumstance a broker will have an idea which lender will be able to give you the cheapest and best deal.

As property development mortgages are usually taken out in the range of £150,000 plus they are taken out on an interest only basis. An interest only mortgage means that the amount you pay each month will come entirely off the interest. As a result you will be left with paying off the full amount of the capitol you borrowed once the mortgage reaches its term. However the monthly repayments would be considerably lower than if you had taken a repayment mortgage. The repayment mortgage has the advantage in that at the end of the term you are left owning nothing as the repayments are taken off both the capitol and interest. Lenders will usually offer terms from 1 year to as many as 20 or more if you are taking on a huge project.

When it comes to the amount you are able to borrow this will usually fall somewhere in the range of 70% to 75% of the purchase price and building costs combined. The loan to project costs will be based on the gross property development values. In some cases you can raise 100% but this is usually only offered to those who are very experienced when it comes to property development and who match other criteria.

Property development mortgages are easier and cheaper to obtain when you work with a broker. They can find you the best loan in the shortest time possible and the majority of lenders prefer to work alongside a broker rather than an individual. A broker can help you to put together all you need for your proposal and a validated proposal that has had the influence of a broker will get the mortgage off to the best start possible. When you have found a suitable mortgage you do have to read the terms and conditions that come with it. Hidden costs can be found here and this is where you will find how much you have to pay in total, the amount of interest added and any other costs which could be added on.

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