When it comes to property development, securing the right financing is crucial for a successful project. Many developers, particularly first-timers, opt to look for finance via a broker to give them access to a broad range of financing options, as well as advice and assistance along the way. That’s where development finance brokers come in.
Brokers specialise in connecting property developers with suitable funding options, such as property development loans and bridging loans. To ensure you make informed decisions and maximise your chances of obtaining the right financing, it’s essential to ask a development finance broker the right questions. In this article, we’ll highlight seven key questions you should be asking a development finance broker to help you navigate the world of property development financing.
1. How experienced are you as a development finance broker?
Start by gauging the broker’s expertise in property development finance. Ask about their background, track record, and the number of successful deals they have closed. An experienced development finance broker will possess the necessary market knowledge and connections to find suitable financing options tailored to your specific project.
2. What types of property development financing do you specialise in?
Different projects require different financing solutions. Ask your broker about their specialisation. Do they primarily focus on property development loans, mortgages, bridging loans, secured loans, or all of the above? Understanding their expertise will help you determine if they are well-equipped to meet your unique financing needs. You want to make sure you are being offered the right advice for your project, to help you keep costs down and finances made available at the pivotal moments you may need them.
Check out our guide to the range of property development finance available to you.
3. Can you provide examples of similar projects you’ve successfully financed?
Request case studies or examples of projects similar to yours that the broker has financed in the past. This information will give you insight into their ability to secure funding for projects with comparable scopes, sizes, or complexities. It also demonstrates their understanding of the challenges specific to property redevelopments or new builds.
4. What lending options do you have access to?
A reputable development finance broker should have access to a broad network of lenders, including banks, private investors, and specialised finance providers. By understanding the range of lending options available through a broker, you can assess their ability to source competitive rates and terms that align with your project’s requirements.
5. What criteria do lenders typically use when assessing development finance applications?
Understanding the criteria that lenders consider when evaluating development finance applications is vital. Ask your broker about the key factors that influence lenders’ decisions, such as loan-to-cost ratio, loan-to-value ratio, experience of the developer, and project feasibility. This knowledge will help you prepare a strong application and increase your chances of securing financing.
6. What fees and charges are associated with your services?
Before committing to a development finance broker, it’s crucial to have clarity on their fee structure. Ask about any upfront fees, commissions, or ongoing charges associated with their services. Understanding the costs involved will enable you to make an informed decision and budget effectively for your project.
7. How will you support me throughout the entire financing process?
Ask your broker about the level of support they will provide throughout the financing process. Will they assist with preparing the loan application, gathering the required documentation, and negotiating with lenders on your behalf? A reliable development finance broker should offer comprehensive support from start to finish, ensuring a smooth and successful financing journey.
Working with a knowledgeable and experienced development finance broker can significantly enhance your chances of securing the right financing for your property development project. By asking the right questions, you can assess their expertise, understand their specialisation, and determine their ability to navigate the complex world of property development financing.
Remember to ask about their access to lending options, lending criteria, fees, and the level of support they offer.
Alternatives to a broker
Alternatively, you can skip the broker (and their fees) and go straight to the lender yourself. Hunter Finance is an independent lender, providing development loans from private funds. We invite applications for property development projects from all over South East England and assess each project on a case-by-case basis. Many of the questions in this blog are also useful to ask individual lenders to make sure they are the right partner for you.
Get in touch if you want to ask a question or apply in principle.
