A Property Development Loan is a specialist short term secured loan, often provided on a stage payment basis.

Property Development Lenders look for:

• Developer with previous experience
• Clear business plan, breakdown of build costs.
• Build timescale
• Realistic end value
• Planning permission in place, pre build conditions discharged prior to commencement for drawdown.
• Contractors background if applicable
• Already own the land / or can fund the purchase
• Developers exit

If a loan is approved, the lender will appoint a Quantity Surveyor as the works will require stage valuations, which will enable the lender to release funding.

Once the development has been completed, the development loan can usually be paid either from the sale of properties or the refinance of the development into a longer-term loan.

What is Mezzanine Funding?

Mezzanine Funding fills the gap between a developer’s own equity and the amount of senior debt that a bank / lender will provide.

The mezzanine debt will normally be secured by way of a second charge over the property while the bank / lender will hold a first charge.

Bank lending to the property sector has reduced dramatically in recent years, and many successful developers and profitable projects have made use mezzanine support to fill that funding gap