How a bridging finance broker can help property developers

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Bricks-and-Money

If you develop property, it’s helpful to use a bridging broker to arrange to provide funds to finance your projects.

There are a number of lending options available to finance property development projects. Finance for property purchases and developments can often be complex, which is why it helps to have a knowledgeable bridging finance broker to help you find the best ways to raise finance.

Auction finance

A good place to purchase property at often below market prices is a property auction. Many developers use property auctions to find older property that can be modernised and upgraded to increase its value.

After a winning bid, you will be required to pay the full purchase price within 28 days. A mortgage broker may be able to find you a commercial mortgage for the purchase of the property, but often the funds will not be available until after the 28-day deadline. A bridging finance broker can arrange a bridging loan which you will need for a short time until the mortgage funds are released.

Development finance

Development finance helps pay for building and construction work. Older derelict or semi-derelict properties are not eligible for a standard mortgage because they are considered unfit to live in. A bridging finance broker can contact a lender to arrange a bridging loan to upgrade the property so that it then qualifies for a mortgage. After development, the property can be sold for a profit or rented.

On a larger scale, a developer may want to purchase land and then build a number of new houses. This can be quite a complex project. The developer must have funds to purchase the land and then have the finance to be able to start construction. The sale of the first completed houses can finance the construction of the other houses, meaning that the developer only needs enough finance to complete part of the project.

A bridging loan broker that is also a mortgage broker can help finance complex deals by assessing when a bridging loan is needed and can advise on when more long-term mortgage or development finance is required. Sometimes a project will receive funds as various stages are completed.

The broker can help assess the viability of these type of projects. The lender needs to be confident that the first homes are likely to sell. This will be dependent on both the price charged for the house and the state of the property market in the area.

Ascot can help

Property development can be profitable, but there are risks. Buying and developing property in the right location can ensure the success of the property developer. This requires careful financial planning and property development expertise.

Ascot Mortgages arranges both bridging finance and commercial mortgages for business developers. They can help on complex projects and time-sensitive deals when funds need to be available quickly, and can usually be paid back early if the opportunity arises.

There are many alternative lenders that specialise in different types of property development. Ascot Mortgages’ skilled advisors can match your finance needs with the lender who best understands your development projects.

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