Property development finance
Financing property developments of all sizes and types
There are many forms of property development finance. Because of this, to get the ideal funding for their development many developers turn to brokers such as Acorn.finance.
Acorn.finance broker will work with you to assess the type of funding you need for your next development case. We’ll get the best funding from our panel of more than 360 lenders.
For projects converting or refurbishing existing property click here to find out more about property refurbishment finance.
What types of property development finance are available?
For ground up development Acorn.finance have four main types of development loan, depending on the level of funding you need;
- Traditional debt finance (Senior debt).
- Additional lending to fund a shortfall in senior debt (Mezzanine Funding)
- Debt finance with a higher loan to value percentage (Stretched senior debt)
- 100% project funding through a joint venture with the finance provider (JV funding)
We’ve been arranging funding since 1997 and, if you’ll forgive us for boasting but we think we’re quite good at it!
In fact – 7 x UK Best Broker Awards back us up in that assertion, so does our 5 star customer feedback.
So -for your buy to let mortgage needs, or anything else funding – make sure you use a broker you can trust.
Types of property development finance
Senior debt is the “traditional” form of property development funding. As short term finance it’s a form of bridging finance for property development specifically. That means, that like a bridging loan, the development loan will;
- Be short term, generally up to 24 months or 36 months for a larger project.
- Allow repayment of the loan and the interest accrued at the end of the loan via property sales or refinance.
- Draw down in stages as work on the development project is completed.
The amount of the loan is based both on the cost of the project, that is the cost of the site and the development cost AND the finished value of the development (The GDV or Gross Developed Value).
Because senior debt offers a lower level of finance against these two metrics, it does tend to be the cheaper form of funding.
Because there will sometimes be a shortfall in the senior development finance, mezzanine finance can plug the gap!
Offering a relatively smaller loan, behind the senior debt mezzanine funding will allow a short term fix to a much higher loan to value.
Stretched senior debt
The traditional senior debt lender will not proceed if they do not think their funding will be sufficient to complete the build, so stretched senior debt combines senior debt and mezzanine debt in a single package.
Offering up to 90% of the development cost, stretched senior debt is the most common form of development finance we work with as brokers.
Great sites are like buses, you wait for an age then three come along at once.
Well, that’s no longer a problem, with joint venture finance you can borrow up to 100% of development costs.
Contact us now on 0808 164 2364
Acorn.finance – 4th Floor, Silverstream House, London. W1T 6EB