If you are a property developer, you will have an awareness that there is no shortage of issues that can hinder a projects’ progress. These unforeseen problems can happen to all types of property development projects, not just those that are products of poor planning and management.
You can have your construction projects delayed for numerous reasons. For instance, your project may take longer to complete if your supplier delays their delivery or the weather becomes too hostile for builders to work in.
Similarly, your preferred construction contractors may be unavailable when you are ready to build. However, most of the recent delays in construction projects across the UK can be attributed to the combined effects of Brexit and the coronavirus pandemic.
Regrettably, any delays you encounter during property development can cause your loan to go beyond its term and as a result incur significant fees in your development finance.
Fortunately, brokers have introduced tailored packages to solve this problem. Sam Covington of Finbri says “Marketed as ‘development exit finance’, ‘sales period finance’ and ‘finish and exit finance’, these solutions are accessible to developers at various stages of their projects and can help refinance the loan onto a more suitable term and rate for the phase of development they’re currently at, and the savings can often be significant.”
Here are some insights into successful property development refinancing.
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When Should You Refinance?
You have many options to consider for property development refinancing as a developer. Therefore, it is always best to carefully study all options you can select before deciding whether refinancing is best for your project. Also, consider the terms and conditions of your project, as well as the likelihood of you incurring any extra costs if you refinance, even if you may experience a net loss. Additionally, consider whether you can fulfil your payment obligations fully and timely and whether you can take advantage of any adjustments to the payment plan.
Generally, you can consider refinancing after working on a project for about nine months. This reality is because nine months is more than enough time to be sure about your chances of meeting your deadlines, as a lot of the work should have been done by then. Debt consolidation alternatives are worth considering if you are unsure about meeting your deadlines, so keep this in mind.
Lengthening Your Terms
You should expect a one-year loan term if you opt for this kind of financing since this is the case for most situations. However, this short term can cause schedule delays, particularly if problems rear their ugly heads during construction or closing. Consequently, it is vital to obtain a development refinancing commitment through dependable brokers like Finbri or by yourself. Furthermore, it would be best to select a company that does not take any penalties or fees for finishing the project earlier than planned.
Lowering Costs
You will typically pay more interest on consumer loans than property development financing. As such, you can save significant funds on the cost of borrowing if you are undertaking building projects. In addition, the interest that builds up on your loan exit is kept, allowing you to invest your entire resources in finishing the building project.
Is This The Time For You To Refinance?
Refinancing is undoubtedly an alternative worth considering as a property developer to avoid increased fees for delayed projects. Refinancing can also give you funds to start your next construction. Other developers seeking affordable ways to fund their operations typically use refinancing to acquire sites, design, and start planning while handling projects. Consequently, refinancing is an easy option you can also leverage when beginning your next project.