Beginning a development can be a huge undertaking, especially if you have investors with stakes in the project. No matter how thorough your contingency plan for a project, it’s not uncommon for things to go wrong.
Anything can happen during development, from unexpected costs to a breakdown in the relationship between you and your team, or simply running out of funds. When developments stall, it can cause a lot of stress, and the main priority is always getting the development back on track, especially when there are time pressures to contend with.
The issue is that it can be difficult to secure traditional funding for part finished developments, but at Bridging Finance Solutions, we can provide funding without the same restrictions, and in this guide, we will outline exactly how we can help by providing property development finance.
Keep reading to find out more.
Why Traditional Lenders Hesitate at Mid-Entry Points
It can be very difficult to obtain finance for a partially finished development from traditional lenders, due to the heightened risk of the project, volatile construction costs, and the rigid regulatory constraints lenders must follow.
Banks tend to have much stricter lending criteria, so if they see that a project has already encountered issues, they are less inclined to invest.
When a project stalls, it is only seen as a higher risk, and traditional lenders are not inclined to invest in an uncertain asset.
Lending for Property Development: How Bridging Finance Fills This Gap
As bridging lenders, we focus more on a property’s potential and the existence of a clear exit strategy, rather than on proposed risks or issues that may have occurred during development, allowing us to be flexible in our approach and provide funding that may be denied by typical lenders.
Bridging loan lenders also secure the loan against the development, using it as collateral in case the development falls through. With this level of security in place in case things go wrong, bridging loan lenders can invest with more confidence.
The Process of Securing Completion Funding
If you need a quick cash injection to continue your development, you need to start the process of applying for a fast bridging loan quickly. You’ll be glad to know that you can get finance quickly from most lenders, but only if you complete the application process accurately.
Initial Enquiry and Agreement in Principle
Before you can begin your loan application, it is essential that you make an initial enquiry. As part of this enquiry, you must outline the exact funding required to complete your development, give details on the property you plan to use as collateral and detail a credible exit strategy.
At this point, you should get an idea of whether or not the lender will accept you and if they believe they can support your development, you should then send a formal application.
Formal Application Submission
Before you can receive any money, you must submit a formal application. This application should contain your personal information, such as ID, proof of address and asset details, as well as information about your development, including a detailed and realistic exit strategy.
Want to ensure that your application is up to the expected standard when obtaining property development finance? Take a look at our first time developer guide for more information about what you should include in your formal application and some easy mistakes to avoid.
Property Valuation
The lender needs to be able to verify the value of your development and so they will instruct a surveyor to conduct an independent valuation of the property. This will include its value in its current state and also the predicted value once the development project has been completed. This is just to confirm that any valuation you have given is accurate before proceeding with the loan.
Legal Process and Conveyancing
The lender will request their solicitors to conduct title checks and verify ownership of the property, before preparing completion documents to register a charge over the property in question.
This is a crucial step in the process for protecting the lender and the borrower.
Formal Loan Offer
After calculating the Loan-to-Value of your development, you will then receive a formal loan offer from the lender. If you agree to the terms of the loan, you can accept and your development can proceed. For more detail on how LTV and interest rates are calculated, take a look at our guide to bridging loan interest rates.
The Timeline You Can Expect
The timeline in which you will receive the finance to continue your development depends entirely on the lender you choose to work with and whether or not you included the correct information in your application.
At Bridging Finance Solutions, we have been able to provide funding in as little as 48 hours, so if you pick the right finance provider, you may be surprised to discover just how quickly you can get the money you need to complete your development.
Make it Happen With BFS Today
At Bridging Finance Solutions, we have years of experience in providing bridging loans for developers and we understand the stress that can be caused when a development is stalled, so we aim to provide fast finance for those who need it.
Had a development stall or generally looking for property development finance? Get in touch with our team and find out how we can make it happen for you.
