FAQ's

Development Finance FAQ's

• I am not based in England or Wales. Can you arrange finance for me?

  Unfortunately not at the moment. The banks that we do business with currently have a strong preference for financing projects in England and Wales.

• What type of project will banks finance?

  Family housing is preferred. Apartments are not as popular as houses due to the oversupply in many areas.

• How much can I borrow?

  This will be determined by a number of factors including your experience, your financial position and the type of project. As a guide, 65% to 70% of the cost of the project can normally be financed, although in special circumstances it can be more.

• How much will it cost?

  You will pay the lender an arrangement fee, usually around 1% of the amount borrowed. The lender will also charge you an interest rate that will be from about 4% over base rate or LIBOR. There may be an exit fee based on resales or the loan amount. You should also allow for other costs such as legal fees, valuation fees and QS fees.

• How much do you charge?

  CD Property Finance will charge you a fee of around 1% of the loan, but where a commission is paid by the lender to us this fee can be reduced. Plus as a member of the Builderbusiness Club, you save 10% on our fees!

• What information will I need to provide?

  We need to present a full proposal to the lender and will ask you for your business plan and details of the development including a development appraisal along with a copy of the planning consent, drawings for the scheme and comparable evidence for the resales. We may also ask for a development cash flow.

• How quickly will I get an in principle decision?

  Once we have the above information we will advise whether arranging the finance should be possible and how long it should take. The final decision rests with the lender.

• How long will it take to draw the loan down?

  The lender will make its decision once it has all the facts and information from us. If the loan is approved you should allow between 6 to 8 weeks. This can be less if you own the site already and more where the project is very complicated.

• What security does the bank need?

  A first legal charge over the property and if you are borrowing in a company name they will need personal guarantees. Sometimes life cover is required - we can arrange that.

• What minimum profit margin does the scheme have to show?

  As a general rule you should expect the development to produce a minimum profit on cost after finance charges of over 20%.

• Must the scheme have planning consent?

  Yes - a detailed planning consent is needed.

• Will lenders fund both new build and conversion/refurbishment projects?

  Yes, but new build is preferred.

• How often can I draw down build costs?

  Most lenders allow you to draw them when needed, but usually once a month.

• Will the lender fund all the build costs?

  Yes - you will be expected to provide all your contribution to the total costs when the land is purchased. The lender will then finance all other costs.

• Will I need to service interest?

  No - the interest will be included in the loan.

• Is 100% finance available?

  Yes - but only for the very best housing schemes for highly experienced developers/builders.