Property Development Refinancing For Beginners

Many property developers have undoubtedly had to wrestle with unexpected issues while undertaking essential development projects at some point in their careers. These problems can occur in every project, including the well-planned and managed ones. It is easy to encounter these issues because there is no shortage of things that can go wrong with your development efforts.

COVID-19 and Brexit are hugely responsible for the numerous construction delays plaguing the UK. However, your development project can face setbacks for numerous reasons like poor weather or a crucial supplier not delivering as anticipated. Similarly, the construction crew you prefer for the job can be overbooked when the time arrives.

You can face huge penalties due to these setbacks if you take out development finance for your project. Nevertheless, you can avoid these penalties by going in for development exit finance. Here are some things you can do to refinance your development projects successfully.

The Best Time For Property Development Refinancing

Property developers have many alternatives to explore when refinancing a development project. Therefore, prioritise taking your time to understand the options you can select before deciding whether development project refinancing is the best thing to do. In addition, consider your current projects’ terms and conditions and whether you will have to pay any extra costs if you refinance, even if this can result in a net loss. Also, think about whether you can make your payments fully and on schedule and the prospects of adjustments.

As a general rule, refinancing is an option worth considering if you have been working on a project for at least nine months. This period is enough time to be certain about whether you can meet your deadlines without any hindrances since most of the tasks would have been finished by then. If you are still in doubt about whether this can happen, various bridge loan refinance options are worth considering.

Lengthening Your Terms

A loan term of just 12 months is expected since this is the case in most situations. However, this short term can cause timetable delays, especially if you encounter issues with construction or closing. As such, it is essential to have a property refinancing commitment by yourself or via an expert finance broker like Finbri. Additionally, select a company that won’t charge you any fees for completing your development project ahead of time.

Decreasing Your Costs

It is common knowledge that consumer loans have higher interest rates than many other types of property development finance. Consequently, it is easy to save significant cash on your borrowing cost if you are taking on a construction project. Furthermore, you can direct all your resources towards finishing this project since the interest that accumulates on your loan exit is kept.

Should You Refinance?

Refinancing is worth considering as a developer for various reasons. For example, refinancing can help you circumvent huge penalties for project delays. It may also help you start your next project by offering enough funds. Therefore, it is hardly surprising that developers seeking frugal ways to fund their operations often use refinancing to acquire their sites and start designing and planning while still undertaking a project.