On Financing Property Development

Updated: Jul 5, 2018

Property Development involves a range of activities, and one of the most important elements in the industry is financing. Investing in properties and developing it into something consumers may be interested in to purchase. But before the profit, you will first need to make sure you have enough funds to finance your project. There are different ways to do this. One of the most common, aside from using your own money is through the lending market route. Here are some of the choices you have when it comes financing your next project.

Commercial Mortgage

Anything that is not considered residential property, you can use a commercial mortgage. A commercial mortgage is basically used for purchasing commercial properties like offices, shops, and factory warehouses. If it’s not meant as a residential or private property, commercial mortgage applies. It works quite similarly to private mortgages. It also works like this, if let’s say, you are renting a building for your business, commercial mortgage helps you to purchase the whole premises even if you don’t have the ability to pay for it outright.

Commercial mortgages would require you to contribute some cash, but if you are unable to do that and secure the whole thing 100%, there’s some additional security involved, only if your circumstances are pleasurable or you have a good bank record or history.

Auction Finance

One of the ways to get a property at a discounted price is through auction. Auction houses require the funds within 28 days after you have won the bid, but what if your funds are not enough? This is where auction finance will be able to help you out. Auction Finance is a type of lender that will quickly provide the amount of money for your bid on the property. There are instances wherein the cash can be claimed in just a week – this depends on your chosen auction finance.

Development Finance

Also called bridging, development finance is a type of financial service that covers costs for building and development. This type of finance is short-lived. Although they mean almost the same, bridging or development finance depends on how your project will weigh in many aspects, especially financially. There are categories on how it will be determined, and these are light refurbishment or some internal work like floors, ceilings, etc. A heavy refurbishment is more on plumbing, electrical, and even some demolition. When we’re talking about an empty plot of land, it’s Ground-up development or starting from the very beginning.

Whatever suits your needs, financing your property development is a necessary step to kickstart your project and achieve your plans.

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