Property development finance is for the developers and builders who have plan and project for the development or reconstruction of the residential or commercial property. This finance is available in the form of residential property finance and commercial property finance. Therefore if you are a commercial or residential builder having a viable project then you are qualified for property development finance.
There are financers and lenders who lend 70%-75% of the price of the property and similar amount for the construction cost. While there are some financers that lend 100% of the total cost. So, if you are looking for such finances then you will have to research the market and find about all those financers who are giving such services.
The residential property finance is for the construction of the residential property and the lenders generally charge 1.5-2.5% in addition to the basic rates prevailing in the market. The loan is given for a term which corresponds to the completion of the project. The commercial property finance is for the construction of the commercial property like construction of the office construction of a retail complex and the likes. These loans are generally for a term of 1-2 years. The financers before lending look into the profitability of the project and the experience of the developer applying for the loan.
Therefore, if you are a developer looking for commercial property loan, then you should be very clear with the business plan that you have. Prepare it well. Make all the documents ready with details of the profits the project will earn after it is complete, the risk that the project involve and the measures that you are taking so as to minimize the risks involved.
Prepare a business plan that is simple and highlight the viability in detail. The lenders will also look into your previous experience as a developer. If you don’t have the experience and are new entrant then the interest rates that you will be paying for the loan will be slightly higher. Generally these loans are lent on the interest basis.
It is better to have an expert’s advice before applying for such loans. The expert will analyze your business plan, your requirements and advice you the best way for the fund that you need. The experts also have their own contact and have more knowledge of the financial companies. They will not only guide you regarding the process of application but can also guide you the financers and the loans that best suit your fund requirements.