When getting development finance UK, you need to present the cost summary of the development project. The costs must be based on appraisal and valuation which includes costs for land acquisition and stamp duty, building costs, professional fees and interest fees and other charges. Aside from the costs, you need to present the cash flow on the phases of the project. This will help determine the borrowing requirement and the interest costs.
Once you have this in place, the company providing development finance UK will determine the price and amount to lend. Amount to lend would be typically 70/75 percent and at more than 60 percent of the Gross Development Value (GDV). The interest is based on bank rate which is 1.50 or 2 percent. For high geared funding or 100% development finance, the security will be first charge. Lender would also mix senior debt with junior debt to provide the 100% development finance to borrowers.
By nature, the development finance UK is short term. Usually, lenders cannot earn from the prevailing interest rate or it does not suffice the return of capital from the overhead of putting the deal together. What the lenders do is charge lending fees for short term funding. The fees and the interest will increase together with risk. The higher the amount borrowed, the higher the interest and fees
Cherry Bo is providing financial solutions to development projects or owning property by the services of Dial Financial Service LTD. With Dial Financial under development finance UK, you have various options to get the needed funds.
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