By: Sean Horton

Funding development can often mean taking out a loan, and the process can be intimidating for anyone who has not followed it before. Contrary to popular belief, not everyone who applies for development finance will need to be a company. Deals can be arranged for individuals who are simply looking to begin to build commercial premises or residential property, or to buy unusual buildings such as pubs or hotels.

Lenders can provide cash to help somebody purchase land, for example, that is they have seen an opportunity in a vacant lot on which to build a commercial or residential development. Alternatively, somebody may wish to simply buy a plot to hold on to it for the future, possibly with a view to selling the undeveloped spot for a profit with planning permission.

Other examples include loans specially tailored to help somebody to convert an existing development into something else, such as cash to buy and renovate a building to turn it into a hotel, or funding for the purchase of a derelict building and for its demolition and construction of a new mixed use project.

Alternatively somebody may want to simply take out a loan to redevelop an existing property, perhaps a block of flats that needs modernisation and refitting throughout. Someone may also simply want to buy a business premises and re-align and re-fit it to suit their own trade, for example if a mechanics firm wanted to buy a former stable block and covert it into a large workshop floor.

These are only examples, and all types of different loan can be arranged for all types of development purpose. Development finance providers are often standalone companies which are specialist providers of just this kind of loan, or are a specialist section of a large company.

Development finance comes in all shapes and sizes and to give an example some loans are available for a year to year and a half to pay for the cost of buying the land or structure and the development costs. The key element of this kind of finance is that the market is not so much of an off the shelf or ready made sector, when compared with the ordinary domestic loans for things like cars or kitchen refits.

In many cases a company will look carefully at each individual application and project, resulting in a tailored plan which is designed specifically for that development. In many cases the lender in question will want to carefully look at the business sense behind your project and may also assess the applicant themselves. Another key thing that lenders may look for is to gauge the likelihood that a person will be able to see through the construction renovation or conversion through to its conclusion.

One of the key decisions to make when it comes to applying for development finance is when to do it – ie should the application be started as planning permission is applied for, or after permission has been granted? In many cases a development loan can be done subject to planning permission, however there are risks involved.

Article Source:
http://www.goarticles.com/cgi-bin/showa.cgi?C=1758506

About the Author
Sean Horton is a Director of Enhanced Wealth, a broker offering development finance and IFA specialising in mortgages and the associated areas of income protection, mortgage protection, and mortgage life cover.