Property development mortgages are taken out by developers involved in specialty building work such as an extension, new build home, loft conversion, renovation and refurbishment. Some developers will become involved in building several homes across a large area and will need a specific mortgage to carry out the work before any project begins.
Property development mortgages is used for funding major building projects, comprehensive restorations or industrial offices, units or warehouses. It is not something that you would take out if you are redecorating within a home to make it more saleable, house flippers that tidy up old properties for profit or conservatory builds on the back of a dining room. Mortgages are for financing larger scale developments and not small projects.
The size of these mortgages will vary wildly and are dependent on exactly what is being built. The lowest mortgages for property development can be as small as £50,000, whereas larger projects can command between £20 and £25 million.
What about the Rates of Interest?
There is no set rate. Deciding what the best rate to pay depends on what you discover when looking through Target Mortgages website – an engine that searches for over 80 mortgage lenders, provides up to 100 per cent LTV (if extra security is viable to lend against) and offers more than 2,500 different financial packages to choose from. There is bound to be one in there that is suitable for the property developer with the larger scale project to finance. Compare property development mortgages here.
What Type of Projects Would Command a Property Development Mortgage?
New build homes are the most common project. It may be just one home or several homes being built on one large plot. Providing planning permission and securities are granted, a property development mortgage would work here.
Commercial property development is not simply confined to industrial units, offices and warehouses. It could be hotels, cafes, shops, care centres or a small block of flats. It is important to remember that having a tenant already lined up before the work has started will greatly increase the approval chances of a property development mortgage.
Development loans and mortgages can be taken out for a number of situations where a large build is about to take place. It is worth finding out if your project warrants, or is likely to be approved for, a property development mortgage.