The demand for properties has risen over the last year within the UK and many first time buyers are aspiring to get on the ladder. Many new buyers want to invest in a property development project and make a profit from the sale of the home once the work is completed. In order to do this, you will need initial financing. Here are some of the options available for financing your project.
Mortgages
In order to buy the home you want to develop, you will need a mortgage. Mortgage rates are at an all time low thanks to government funding therefore you can shop around for competitive rates. Although you can now put down a deposit as low as 5% of the capital, it is often more advantageous to put down a much higher deposit. Many mortgage lenders will offer lower rates for higher deposits. A fixed rate mortgage is probably your best option as it will be easier to organise your finances. This way, you know what you will be paying each month and can plan the development costs around this.
Property development loan
Many lenders offer a property development loan for things like refurbishments, renovations and conversions. This is a type of short-term lending which will allow you to make the necessary improvements to your new home. Although there are higher set up fees associated with this kind of loan, the repayments can be delayed until you sell the property. This type of loan often requires you to have strong credentials but, if you are an inexperienced property developer, then you may be able to get old employers to put in a good word for you.
Investors
You can even jointly invest in the property and split the profits with a willing participant who can supply some of the funding for your project. In order to do this, you will need to start meeting people who are in the business of property. You can do this by searching on forums, asking around at networking events and asking friends and family if they know anyone in the property business. A family member may also want to join the venture with you and they may have some ideas on how to reduce costs which will be useful when trying to make a profit.
Many people do not price the work before investing in the property so make sure you get an estimate from a reputable builder in order to decide if it is a worthwhile investment. Watch the market to ensure that you are investing at the right time. You may still have some time to put away more savings which will give you a higher budget to work with when the time is right; that way you will also be able to buy a house fast.
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