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Funding property development

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  • Funding property development

    Hi all,
    I hope someone can provide some info on how "property developers" fund their purchases. It sounds obvious but I'm hitting a brick wall. My partner and I gave up our boring jobs, went travelling, and now returned to England with an aim to make at least a small living from property development. Having gone to a couple of brokers however I'm being told that "mortgages arnt really the way to fund property development"...and Buy to Let mortgages have a minimum term of normally 12 months so not good for developers. I'm also being told that as I have no employed/self employed income (only rent) there arnt many options for Buy to Let either. I'm fortunate to have a home with about £130k of equity and a second house which I inherrited and own outright worth about £160k. So I have equity, but this doesnt appear to help. Do property developers normally use mortgages or bank loans?
    Thanks in advance

  • #2
    Re: Funding property development

    Hello, the best way to start off is to forget about using a mortgage or B2L product for prop dev. Get yourself into a bank and look for a business manager and be prepared to have to foot 40% of the total project cost up front.

    If you're just doing one prop then a "self build" might be an option, but seeing as you're looking to do it for commercial reasons as opposed to just doing it to develop a new home for yourself, then you might hit another wall. Unless of course, you're prepared to develop the new unit to be your main residence once completed... catch my drift??!

    You'll need probably a lender whose got a bit of sense about them in order for them to take account of your investment income as opposed to a "standard" income stream from employment. and further, be prepared to have to remortgage your house to release that c.£290k you've got tied up in equity


    • #3
      Re: Funding property development

      There may be ways to achieve what you want but it is a specialised field. I wouldn't bother with banks by the way unless you are very experienced.
      If you would like to have a chat, I'm at your disposal.