Development Finance
What is Development Finance?
If you’re unfamiliar with development finance, here’s a brief explanation of what it is and how it operates.
Development Finance Explained
Development finance is a short-term funding solution, typically lasting between 6 and 24 months, designed to cover both the purchase and construction costs of residential or commercial development projects. This could involve anything from a new build to a conversion or refurbishment, whether for a single unit or a larger development with multiple phases.
A development loan is usually divided into two parts:
Funding the Site Purchase
The first portion of the loan is allocated to help with purchasing the development site. This could either be a plot of land for new builds or an existing property that requires refurbishment.
Covering Construction Costs
The second part of the loan is used to fund the building costs of the project. Instead of being provided in a lump sum, these funds are typically drawn in stages as the work progresses, often on a monthly basis, based on the completion of specific project milestones.