DEVELOPMENT FINANCE
DEVELOP THE SKILL TO MAXIMISE INVESTMENT
There are many, many types of development finance but in essence it is a loan that is given to contribute toward the purchase of land or a building and the cost of the development of the land or the building. The lender will take a charge against the title and sometimes on additional property to make up the security depending on the amount that the borrower wishes to borrow. Most development finance facilities are set up to allow monthly interest charges to be added to the loan facility as opposed to being paid monthly.
The interest is then repaid when the loan is redeemed (usually once the development is completed and the properties sold or refinanced onto commercial mortgages). Having the interest added to the facility takes pressure off the developer so that they can concentrate on the development.
THE BENEFITS
- Allows somebody to develop without having the cash themselves to do so
- Generally very profitable for the developer
- Interest can be rolled up until the end, meaning no financing costs through the development
- Costs are charged monthly so the quicker you work, the less you pay