Property development finance can fund projects for first-time and experienced developers. From conversions and lighter refurbishment to large asset acquistion, development finance can range from £26k all the way up to £250m. The loan term for this type of finance can last between 3 and 24 months, but what happens if your project isn’t finished as the end of the term is approaching?
Unforeseen problems can and will arise during projects. The construction industry has been impacted the pandemic and Brexit. But projects can also stall due to smaller, but significant reasons, including suppliers not delivering as expected or adverse weather lengthening your project’s timelines. Furthermore, you may need to search for another construction crew because your preferred one is overbooked when you need them to start work.
These delays can be expensive due to significant penalties if your project is funded by development finance. Fortunately, development exit finance can help you avoid various penalties.
When Should You Consider Development Refinancing
When you’re not yet ready to exit your development finance but the term’s nearing its end, development refinancing can ensure project completion and avoid penalty.
If your finance terms are approaching their end, review your current project’s terms and conditions and whether you will have to pay additional expenses if you refinance, even if it may come at the price of a net loss. In addition, consider your ability to repay fully and timely and whether you can take advantage of any adjustments.
Lengthening Your Terms
Development finance terms can be as short as 3 months but are likely to be 12-24 months. However, this may not be long enough. Therefore, getting a property refinancing commitment through a trusted finance broker like Finbri can gain a better rate for financing the last stage of the project – the marketing and sale/or mortgaging of the development.
Should You Refinance?
Refinancing allows you to escape huge penalties and other fines if you encounter project setbacks. Additionally, it can give you the funds to kickstart your next project. As such, many developers looking for cost-effective ways to fund their efforts usually leverage refinancing to get a site, start designing and begin planning while still working on a project.
