How residential development finance can help business

by Esmond Perry Welcome to the Esmond Perry's Research lab Introduction
Business units and corporate companies and also individuals, have the need of availing residential development finance for investing or fulfilling their professional objectives. It is however unknown to few parties, as how the finance loan can help a business.

Body
Residential development finance is best availed by business units to gain funding for developing home extensions, building residential properties and projects, investment or purchase of land and other such purpose.

The development finance lenders also assist business to get land financing for projects, construction finance for single as well as multiple home projects, acquisition financing and term financing. They give personalized assistance right from the funding process to development stage.

Generally, middle men also known as brokers are often responsible for introducing a business unit to known lenders to deal with residential development finance loans. The corporate companies may not get the decision to fund their projects, if they default with the necessary legal documentation, and lack of business project papers. It also depends on the past work background of the corporate, experience and the size of the project to execute the work.

The development finance lenders generally give finance between 68% to 75% of the value. Again, the money is lent on the experience in the related project field and a good track record of past performance. It is tough to get residential development finance even with paperwork and documentation, as there are many considerations of the project of a business. The property stake and size, along with the rate of interest which is generally between 1.5% to 2.5% also plays a major part in it.

The finance for development of residential properties can go from £150,000 to more than 5 mn depending on the project and its details. Mortgage or collateral security is also needed to be given to the development finance lenders if the property purchased is thought to give it for rent purpose. Experts opine that the borrowing end value of the property should be ideally less than 65% of the GDV decided.

Business companies are generally asked to pay the mortgage on interest by repayment method or by the interest only method. Repayment method by mortgage on interest option is given by development finance companies, unless specified to be given by another way.

One of the major benefits, a business or corporate company can get by residential development loan, is that they can get their finance as required. The lenders like bank can lend out property money for the purpose other than private lenders. In some cases, tax benefits in terms of depreciation can also be availed, if the loan is taken for more years to come.

Another benefit which can be taken is that in some circumstances, one can ask the financial lenders to buy the land on personal behalf and cover the development costs also. However, it is best to ask experts, if this move is feasible to carry out.

The author Esmond is a business consultant, offering consultancy to clients on development finance.

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Created on Dec 31st 1969 18:00. Viewed 0 times.

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