Needless to say, you have a range of options when it comes to financing for your property development project. The most common type of financing is a commercial mortgage, which is usually taken advantage of by businesses who would like to have their own business premises. Another option for financing is auction finance, and this is where you can acquire property at a discount. You do, however, need to find lenders who specialise in this kind of financing. Yet one other option – which is also becoming more popular today – is development finance, also referred to in some occasions as bridging finance. This can refer to short-term financing or funding which helps you pay for the cost of development and building.
So which financing option is best for your needs? Here are a few factors to consider in order to know which financing you require.
Know the extent of your building project/works
Before you even begin exploring your options in regards to financing, however, you have to find out the actual extent of your building project/works. It would be a good idea to know the different categories when it comes to renovation or refurbishment, as follows: light renovation/refurbishment, heavy renovation/refurbishment, and development from the ground up.
Light renovation/refurbishment is the simplest and least complex type of building project. This is where the major adjustments or changes are deemed more ‘aesthetic’ instead of structural. This may also require repairs or surface work on the walls, ceilings, and flooring.
Heavy renovation/refurbishment, on the other hand, may not only require changes in the aesthetic quality of the property, but may also require fixing or even moving a structure’s internal plumbing, electrical system, or walls. This may also involve the addition of rooms and walls in the external area of the structure. Heavy renovation/refurbishment may also include rebuilding as well as demolition of part of the structure.
Development from the ground up is deemed to be the most intensive type of building and development project, as it usually begins with empty land or a very arduous conversion or refurbishment (such as when nothing is left except for the stone-work of the structure).
Your financing options based on your development project
Finding the right financing all comes down to the extent of your development project. For instance, you may opt for development financing if you have a more extensive development project or a project which will start from the ground up. This should then cover not only the building expenses, but also the purchase of the land itself. You should make it a point to speak with a property development expert on residential development finance and property development financing so you can gauge your options for financing in the best possible way.
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