How to get the best development loan rates and terms?

Lenders base their debt, interest rate and terms on the perceived level of risk.

In order to determine the level of risk and assess the creditworthiness of the developer, it is important that you provide the information a lender needs to approve a development loan application.

So, what information does a development finance lender generally ask for?

Development Appraisal

Assessing the viability and profitability of the project by deducting costs from GDV. Costs include: acquisition, construction, professional fees, finance and post construction costs such as marketing.

Location analysis

Strength of demand, target market, transport links, local amenities, market intelligence including sales/letting prices of comparable properties.

Unit schedule/project description

Type of accommodation (house, flat etc), number of units, sales and rental values, size and description of the accommodation i.e number of bedrooms, receptions, bathrooms, parking etc. Include any designs and plans.

Developer’s experience

Information about previously completed developments, ideally similar in size to what you are applying for. The lender needs to be confident about your skills and abilities.

Professional team

Planning consultants, design consultants, architect, main contractor, quantity surveyor, structural engineers, agents, accountants, lawyers etc.

Schedule of works/build programme

List of the work required with cost breakdown, sequence, timing and duration tasks carried out from start to end of the build.

Cash flow

Timing of income and expenditure for stage payments.

Other information

Financial accounts if applicable, income/asset and liability statement, details of planning consent, group and company structure, other ongoing projects, contingency allowance (5-10% of construction costs typically required).

Hope this guide helps.

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