The House of Commons introduced the Right to Build Act to help ease the process of land purchase and promote smaller property build developers.
Securing finance however for a planned construction project can be a daunting task. Asking lenders to hand over hard cash against a dream and an empty plot of land can be an incredulous task even for the hardened housing developers.
UK Property Finance have helped independent developers acknowledge the need for an alternative approach to securing flexible fuss free funding.
Typically referred to as a Construction Loan or Self Build Loan, this type of finance is usually a short-term loan used to pay for the cost of constructing the building project.
Most importantly the loan amount is based on the costs needed to build the development and are not based on the value of the property at the end of the project.
The funds are usually drawn by the applicant against an agreed build schedule and thoroughly monitored at each stage to ensure the project is on track and within budget for successful completion.
UK Property Finance can help ensure the swift and positive outcome to your Construction Loan. We have years of experience in understanding the guidelines required to gain approval for funding this type of home building.
Read on to see our explanation of how a construction loan works and please call if you think this might be just what you need to build your dream.
How a Construction Loan Works
Once the applicant is approved the lender will start paying out the agreed loan. These payments are set against an agreed schedule known as draws.
The number of draws are agreed up front between the lender and the applicant, typically the first draw would come from the applicant’s own share of the funds designated to the project.
What to expect from the Construction Loan Rate
As with all lending interest is charged on the amount of money borrowed. Typically Construction Loans are interest only loans, so you only repay the interest incurred on the loan and not the whole loan amount.