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Submitted by: Sean Horton
If you are looking to build residential property or if you wish to renovate an existing property then you should look into getting help when it comes to residential property development. The internet holds a vast amount of information on the subject and some give better advice than others. There are specialist websites that are able to give you free information and help you to find the best deal.
When looking into residential property development the first decision you should make is the type of financing you are actually looking for. The majority of those starting out get development finance and refurbishment loans confused and assume they are the same thing, they are not. Development finance is taken out by those who have an extensive project to work on or when they wish to make extensive changes to a property they already own. A refurbishment loan is taken when there are slight changes to be made or small improvements.
As a very rough guide anything that requires an individual to require a loan of 150,000 or more would need to look into taking out a residential property development loan. Anything below this then a refurbishment loan might be better considered.
It is essential to take an experts advice because some lenders will allow an individual to borrow based on the properties value after the changes have been made. This of course is in your favour as you will be able to borrow a lot more. Of course before a lender will give you a loan you will have to show them the proposal for the renovations you will be making and again a specialist can help you to put this together.
Unlike a residential mortgage the interest rate that comes with a property development loan will not be fixed but based on the project the individual is proposing. What you intend to do with the property or project and how much the total value of the property is will all go towards determining the rate of interest you will pay. The property type and the experience of the individual interested in residential property development will all be taken into account as well. However as a general rule of thumb you can expect the rate of interest to be around 1.5% to 2.5% plus the Bank of England base rate.
Unless you are a very experienced individual then residential property development finance without full planning consent would be very hard to secure. Newcomers should make sure that they have the full consent and all the relevant paperwork and documentation before approaching a lender or allowing a broker to approach one on their behalf. When it comes to the amount you are able to borrow then this of course will be based individually. However usually this will be around 70% and 75% of the actual purchase price of the property in question and the costs of building. However if the individual has a strong proven track record when it comes to property development then the broker may be able to find them 100% funding.
About the Author: Sean Horton is a Director of Enhanced Wealth, a whole of market mortgage broker and IFA specialising in mortgage advice and the associated areas of income protection, mortgage protection, mortgage life cover and
Residential property development
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Source:
isnare.com
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