The lender would analyse all of the information provided within the application and undertake the usual background and credit checks as required when applying for any financial product. The lender will also require information on the applicant’s personal circumstances, financial background and experience within the building and construction industry. The lender would need to review the business plan of the development including the estimated costs including the stages at which the funding is required to be released. The application process for development finance will usually vary between lenders and requests are often analysed on a case by case basis. Sometimes lending of up to 100% of the build costs can also be applied for, providing that the total amount requested is within 60-70% of the gross development value. Should the borrowing be required for the initial purchase of the site or plot, the maximum amount that can be loaned is typically between 50%-60% of the purchase price of the property. The type of property can include residential houses, commercial property or industrial buildings.
What is a Construction Loan and what are the application criteria?Ĭonstruction or development loans are short term, secured lending products that have been created for the purpose of funding the development of the property.
Construction or development loans are types of financial products to be used to build a new property or to develop existing properties.Īs with any financial products, there are risks to the lender however these are amplified where first-time developers are concerned and therefore sometimes new developers can find it tricky to obtain finance to commence new projects.Įven experienced developers can sometimes face challenges when securing finances for projects depending on a range of factors linked to the project, personal circumstances or the market conditions.
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