Barclays Property Development Finance for property developers in the UK Barclays bank is one of the top six high street banks in the UK, they are a retail bank and also offer a large number of commercial financial options to business such as asset finance and property development finance although they offer development finance it would only be available to existing customers with a track record showing that they are experienced developers, if you are not a customer then they would still consider the finance providing you have a list of previous developments that you have completed within budget and have sold on at a profit, Barclays Property Development Finance is usually only up to 60% of the costs that you will incur on the development so they would give you 60% of the land value and 60% of the development costs, including your professional fees, however on the development costs they would expect the developer to put their 40% of the development costs up front so you would finance the first 40% and they would come in behind you with their 60%, most property developers prefer to do this the other way round and with other lenders they will actually fund all of the development costs so they are sure you have enough funding in place to complete the development without running out of cash half way through the project.
Fortunately there are over 100 lenders in the marketplace who offer this type of finance to property developers and with these specialist lenders you are not required to put your cash in first they would look for you to put a percentage in on day one when you purchase the land or site and then offer to fund all of the development costs as you progress through the development, this is far better for a developers cashflow, they will also offer developers considerably more finance than would Barclays bank, many will go as high as 90% of all of the development costs although this would incur a higher interest rate, most funders prefer to keep it to 70-80% of costs and it at these levels that you will get the best interest rates.
What are the Costs with Barclays Property Development finance?
Like all development finance lenders you will be required to pay either a commitment fee or an arrangement fee of 1-2 % of the loan amount these are really one and the same thing apart from that a High street bank will want this fee-paying before processing your loan application, with a specialist lender it is called an arrangement fee and you do not pay it until you have actually drawn down your loan, high street banks will also ask for an exit fee, this will be based on the GDV (Gross Development Value) and could be as high as 2% of the GDV, no such fee is charged by a specialist lender. Interest rates vary from 4%-10% per annum depending on the loan to value offered and how attractive to a proposition is to a lender.
Other fees you will be required to pay to include a valuation fee and fees for both the lenders and your own legal work.
1st UK Finance deals with all of the lenders in the UK, so get in touch and we will quickly tell you what is available for you and what the costs will be call us now or use our web form and we will contact you by return.
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We offer finance to both individuals and or limited companies and also partnerships, most developers actually set up a new ltd company for each project and then dissolve it once the scheme has been completed.
Property development loans are not FCA regulated and so not covered by the financial conduct authority
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