The development finance process can be broken down into several stages, from initial enquiry to project completion. The process can vary depending on the lender but typically involves the following steps:

• Initial Enquiry: You submit your enquiry to the lender, providing details about your development project.
• Free Advice: The lender provides you with advice on the best type of finance for your project.
• Formal Application: Once you proceed, submit a formal application to the lender.
• Agreement in Principle: The lender provides you with an agreement outlining the loan terms and conditions.
• Due Diligence: The lender conducts due diligence, which may include a site visit and valuations.
• Formal Loan Offer: The lender provides you with a formal loan offer, which you accept.
• Documentation: Lawyers create the necessary documentation, which is signed by all parties.
• Completion: The first drawdown of funds is made to buy the land or start construction, and further drawdowns are made to fund build costs.
• Repayment: The loan is repaid once the development is sold or refinanced.

Lenders will require a substantial file of documents from the borrower at the time of application. The documentation requirements can vary depending on the lender but typically include:

• Details of planning permission and any drawings,
• Details of any planning restrictions or levies that may impact project profitability
• Complete breakdown of all project costs
• Details of the borrower’s development experience and examples of previous projects
• Schedule of works (operational calendar) broken down by phases
• Details of architects, contractors, etc.
• List of borrower’s current assets and liabilities, plus projected expenditures during the life of the project
• Proposed exit strategy
• Projected gross development value

Interest rates for development finance can vary significantly depending on the lender, the nature of the project, and the perceived risk. Rates can range from 4% to 15% or more and may be fixed or variable. It’s important to shop around and compare rates from multiple lenders to ensure you get the best deal possible.

In addition to interest rates, there may be a range of fees and costs associated with development finance, including arrangement, valuation, legal, and exit fees. It’s important to fully understand all of the costs involved before entering into any agreement with a lender.

In most cases, lenders will require planning permission to be in place before providing funding for a development project. However, some lenders may be willing to provide finance for projects that are in the planning stages, with the understanding that funding is contingent on obtaining planning permission.

While it may be more difficult for first-time developers to secure funding, obtaining development finance without prior experience is possible. Lenders will typically require a more detailed business plan. They may require additional security or guarantees, but with the right approach and support, first-time developers can still access the finances needed to get their project off the ground.

While having bad credit may make it more difficult to secure funding, it is still possible to obtain development finance with a less-than-perfect credit history. Some lenders may be willing to overlook previous credit issues if the borrower can demonstrate a solid business plan and a clear path to success.

Bridging finance is a short-term loan designed to bridge the gap between the purchase of a property and the sale of an existing asset or the receipt of long-term finance. Bridging finance can be an effective way to secure funding for property development projects, particularly in cases where other funding options may not be available or may take too long to arrange. However, bridging finance can be more expensive than other forms of finance, so it’s important to fully understand the costs involved before proceeding.