Development finance began to show a fair amount of potential as of late. Buying a property at a fairly low initial price and then developing it to be sold or lent at a higher price seems like a good investment for many people. It brings enough profit so that in the long run, you can recover the money you have invested in the initial purchase.

But still, do you understand exactly how this type of finance works? You may know a thing or two – but understanding the basics will make the difference between starting a successful business – and one that will leave you bankrupt.

What Does Development Finance Offer?

There are several types of finance options for development, each one targeting a certain kind of development. A smaller development, for instance, may involve a simple aesthetic renovation that has nothing to do with the structure of a property. This can be anything from a wall painting to a change in staircase rails, door knobs, and other similar items.

A lender, however, may also go for redevelopment finance – which is basically classic development finance that also handles the structure of a property. Those who want to apply for residential development are generally the ones who also need to dive into heavy work to the house structure.

In other words, if you are planning to extend the house or to rearrange the walls, you will have to apply for redevelopment finance. While this may be rather costly, it can also drastically increase the value of a property. On the long term, this may bring you a fair amount of profit.

Last but not least, property development finance will allow you to develop a building from scratch. Say that you have a piece of land, but you have nothing worthwhile on it. If you build an establishment there, then you’d be able to gain more profit by bringing in more tenants. In the long run, this will definitely prove to be a good investment.

However, bear in mind that a new project that is built from scratch can be quite costly – particularly if you don’t really know what to invest your money in.

It is recommended that you first contact a broker and ask for their advice before signing any contracts. In the long run, this might just save you pounds that reach the thousands.

Click here to start your development finance application

By on September 21, 2020   /   Blog