If you want to start investing in property and don’t have tons of cash lying around to get started with, you’re going to need property development finance. There are various different options to consider including business loans, mortgages, and even unsecured personal loans. Your eligibility for these different types of finance will vary a lot depending on your personal circumstances, the lender, and the type of finance. Some lenders may require a business plan, while others will simply take your credit score and income into account. We’ve looked at some of the main ways to finance your property development.
Cash
If you have a lot of money handy, you can use it to invest in property without borrowing. While this is not usually a viable option for those who are just starting out, it’s not always impossible – for example, if you have a lot of savings, other high-value assets that you can sell to raise the money, an inheritance, or a big win, you can use this to get started with your property investment venture.
Mortgages
There are various mortgage types available for those who want to invest in property development. You may need a buy-to-let mortgage if you want to purchase a property to rent it out. These mortgages come with some differences to a conventional mortgage including a higher deposit, larger interest charges and bigger fees. On the other hand, if you are planning to buy a property in order to renovate it sell it later down the line, you will require a buy-to-sell mortgage which is designed to allow you to sell a property shortly after purchasing it. Again, these mortgages typically come with higher deposits, fees, and interest rates. If you are looking to invest in a high-value property to either let or resell, the experts at Enness Global Mortgages can help you find the right lender and mortgage product for you.
Property Development Finance
Property development finance involves a variety of loans designed to be used by those who are investing in property. It includes specialised loans for companies who offer property development, and loans designed to cover the cost of heavy property refurbishment. Acceptance and rates for these types of loans will depend on a wide range of factors including the strength of your business plan and your track record with property development, therefore they might not always be the best option for those who are just starting out.
Bridging Finance
A bridging loan is a short-term, high-interest loan that is often used by people who want to buy a new property before selling their existing one. You can use a bridging loan for property development to buy a property, renovate it, and sell it in order to repay the bridging loan. Since these loans are secured, you will likely need existing property or land to secure it against.
Investing in property development is a wise decision for many. Before you start, explore your financial options to choose the right funding type for your new venture.
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Daniel Peacock.