Development Finance Calculator
If you need to figure out whether or not a potential project is commercially viable then our property development finance calculator will enable you to see the actual costs at a glance.
Most property developers will tell you that the acquisition of a suitable funding package is one of the most critical elements when determining the profitability of a given project and that getting your homework right where the financial aspects are concerned can be the difference between failure and success.
Once you have entered the relevant details, you are free to tweak certain variables, such as the loan term, rate of interest and the exit fees, so that you can see how the outcome is affected when choosing one product over another. For example, if one product has a lower borrowing rate with higher exit fees, and the reverse is true of another development loan, there will obviously be a crossover point where one product will be more affordable than the other, depending on the amount borrowed and the loan duration, among other factors
Although our online development finance calculator is an excellent reference tool that has designed to provide highly accurate results, it should still only be used as a guide. By talking to one of our trained advisors, you will usually be able to get a much better deal based on your individual needs and borrowing criteria.
The reason for this is that different lenders have different rates depending on the specific type of development, the level of investment that you intend to provide yourself and the actual location of a project. Development finance is complicated at the best of times and it always makes sense to get as much expert help and advice as possible when applying for a loan.
When using the development loan calculator, you will need to provide the following information before the results are generated.
Loan Amount – The total net loan amount is overall amount you need to borrow. It includes any funding required on the first day and any additional finance that will be required throughout the subsequent stages of development. There is no need to include the borrowing fees or interest charges as these will be calculated automatically.
Loan Term – This is the total length of the loan term, expressed in months.
Land Cost / Residual Value – If you already own the land, then you need to enter the Residual Value. Otherwise, you need to enter the Land Cost in order to work out you would be better off selling the development site as opposed to building on it yourself.
Stamp Duty – This is the amount of stamp duty you are expecting to pay when purchasing a development site.
Amount Available from Customer – This is the amount of funds you are willing to put into the project from your own pocket.
Build Cost – The total projected costs involved with a development, only without the Stamp Duty, Land Costs or Facility charges.
Gross Development Value – The GDV amount is the gross value of a project on the completion date – or at the expected stage of development where you intend to sell a project on, once certain works are finished.
Prime Funding (Initial Release) – This is the amount of finance you require at the first stage of the development (i.e. On day one).
Calculate Interest by Year or Month – Most interest charges are worked out on an annual basis, but you can change this to monthly when using the calculator.
Interest Rate – Although on our calculator this is set to a predefined % by default, you can change the rate of interest to match the product you are applying for, or wish to compare.
Releases – You need to inform the calculator how much funding you require and on which dates. With development finance, you only pay interest on funds that have actually been released. By altering the amounts and the release times of the various stages of funding, you can easily see how the interest charges will be affected and how profitable the project will be.
Property Development Finance – Borrowing Fees
When using the calculator, the various costs and borrowing fees will be worked out automatically. However, with so many lenders offering so many different products, the fees can vary tremendously from one loan to the next.
The facility fee is the main cost of borrowing that a lender will charge for granting you access to a specific product. This is typically worked out as a percentage of the total amount borrowed, or the GDV (Gross Development Value).
Other fees include valuation costs, legal costs and surveyor fees. To keep things simple, the calculator will provide a quick estimation of these charges.
There is one more important factor to consider when applying for development finance and this is the Exit Fee. This is the amount you will be charged when settling the debt in full. Again, this is worked out as a percentage of the total gross loan amount or the GDV and it is set to 1% by default.
Other Costs and VAT Claim Back
If there are any other costs involved with a project then you need to enter them in this section. These are any costs that were are not included in the Total Build Costs.
If you are entitled to claim any VAT back then you can enter this amount in the VAT Claim Back section. VAT refunds will reduce the total cost of a project and, subsequently, increase your profits.
Property Development Finance Calculator – Results
Once you have submitted the requested information, the calculator will return a list of results.
These are broken down into the following:
Monthly Interest – this displays the gross loan amount on a month by month basis, taking into consideration the facility fee with the total amount of funds released plus the actual interest charges at the end of each month.
Net Loan Amount – the overall loan amount requested, along with the funds released on day one, and any subsequent funding you expect to be released.
Interest Charges – the total amount of interest you will be charged.
Gross Loan Amount – the net value of the loan along with the facility fee and associated interest charges.
Redemption Loan Amount – the amount required to settle the loan (gross loan amount + the exit charges)
Valuation Costs – a quick estimation
Quantity Surveyor Fees – approximated
Legal Costs of Borrowing – approximated
Other Costs – any other costs added to the total build costs, as entered by the applicant.
- Development Finance Calculator
- Development Finance Criteria
- Example of a Development Finance Loan
- Development Case Studies
- Development Finance Types