A property development mortgage is a commercial short-term loan generally offered in two stages – the site loan (purchase or refinance) and the construction loan. Both elements are secured on the development site in question and the building project as it develops but can also be secured wholly or partially on other residential or commercial property assets owned by the applicant (additional security).
The development loan provides you with the means to complete on the purchase of the site if necessary or to re-finance the site if encumbered to another lender or the site can be used as your contribution if valued sufficiently so the lender just funds the build costs.
Once the development or refurbishment program commences, funds are made available to be drawn down at agreed stages to assist with the development, refurbishment or conversion costs associated with the project.
Property development mortgages can only be put into place on an asset that already has planning permission for the construction phase – if planning is not in place then a bridging loan can be offered to buy the land but at a low LTV.
Property Development Term Loans are made available, for the following types of project:
- The development of residential houses, bungalows, flats or apartments on land with the appropriate planning permission in place.
- Conversion of existing dwellings to residential units with the appropriate planning permission.
- Refurbishment of existing dwellings with the appropriate planning permission if applicable.
- Completion of existing ‘distressed’ developments subject to the availability of current and satisfactory monitoring reports.
- Conversion of Commercial and Office Space to Residential Dwellings
- Completion of Commercial Units, Office, and Mixed use Schemes, new build Hotels, student accommodation etc. with management or sale agreements in place etc.