There are actually many things that the lenders scrutinize in the proposal. But one of the most important considerations is the value of the property when all the work is completed. This is often referred to as the Gross Developed Value (GDV) and lenders will use a percentage of this value to decide the upper level of funding. In some cases, the GDV can be the basis for providing the 100% development finance. Experienced developers can easily and reliably identify the GDV and can even support it on their development proposal.
High street banks normally finance around 70% of the purchase price of the site and 70% of the build cost. Although this is acceptable for some development projects, most developers handling large scale development are still unable to raise the remaining necessary capital to complete the project. This is usually because all their available capital is tied up in other projects or there can be other relevant reasons.
Development finance specialists can come handy in the need for additional funds. Lenders for development finance UK are able to offer higher levels of funds than the mainstream banks and are also able to work to tighter deadlines. They can provide the additional 30% development finance or the complete 100% development finance based on the GDV, added with the experience and reliability of the developer. For novice developers, certain funding scheme such as the mezzanine finance can be arranged to get the remaining fund on top of what the banks can provide. Developers then need to work with finance broker to find the right lender for any viable project. They just need to work on the right proposal to get what is needed.
