View Full Version : Finance for property development
kayak
11th February 2009, 08:40
Sorry, a few property finance threads of mine popping up!
Looking for some finance for a property development. Spoke to one company who said they would fund 65% of the overall cost (purchase and development cost).
Is this the norm, or are there methods of raising more finance?
Many thanks.
John
Jheath
11th February 2009, 08:50
The cheapest way is usually to raise equity on another asset (say a previous development or your own house) to fund the development then when it's finished mortgage that (or sell it) to fund the next one and so on. This way it keeps the bank away from the details of the development and all you ever need to do it mortgage finished property. The old days of LTV of 95 or 100% are gone of course, 70% is a good average in todays market to get competative rates.
Of course opinions differ - just my two-pen'orth
kayak
11th February 2009, 19:22
Unfortunately as I have not had any property for very long there is not enough equity to raise finance against, so it is coming down to cold hard cash. Your 70% seems about right but I could certainly do with going a bit higher on that one!
Maybe time to look at loans as well as more traditional finance!
AOB
11th February 2009, 20:31
Kayak, a 40% equity : 60% debt split is relatively standard in large commercial deals at the moment. Once you've found the equity element the debt should be easier to find...
kayak
16th February 2009, 18:35
Sorry for the delay in the reply! Do you mean once I find the 40% deposit the loan should be easy to find?! If so then that's easier to say than do!
Maybe time to look at alternative funding!