If you have clients that are jumping into a property development project, whether it be for construction, renovation or refurbishment purposes, there are two types of development loans to consider: commercial and residential.

Wondering what the differences are between the two? Let us simplify it for you and let’s work together on finding a tailored solution for your development clients next project.

Commercial Development Loans

This is a short-term flexible lending option and covers anything from retail spaces to educational institutions. Commercial development loans typically last between 6 to 24 months and are generally unregulated. When it comes to the end of the loan term, it’s important for your client to consider an exit strategy. They can either sell the property to repay the loan or transition into a long-term mortgage.

You clients may need to raise commercial development finance for several reasons. Here’s a few of them…

• Investments into commercial venues e.g. restaurants, hotels

• Building commercial units to rent out

• Converting larger units into smaller ones

• Building commercial units for own use e.g. office blocks

• Cover cost at various stages of development e.g. labour, materials, fees

Residential Development Loans

This loan type is designed to help fund projects relating to residential properties at various stages of the process whether it’s a single property or a handful of properties. Similar to a commercial development mortgage, residential loans are short term ranging from 6-24 months and require a well thought out exit strategy. Depending on the nature of the project and your clients requirements, they may be regulated.

Here’s a few reasons why your clients might need a residential development mortgage.

• Purchasing unusual properties for renovation or conversion e.g. a hospital building into flats

• Fund the build of new residential properties

• Refurbishment or renovations of existing properties

• Cover cost at various stages of development e.g. labour, materials, fees

• Funding ‘build to let’ projects

• Supporting self-build ventures

Development finance isn’t a one-piece puzzle. There are many elements to consider when choosing the appropriate loan type, and that’s where we come in. With our knowledge of the market, and access to flexible products we’re sure to hit the nail on the head with the perfect deal for your clients.

Interested in a quote? Call our New Business Advisers on 01827 337710 or enquire through our CrystalHUB.

The clear choice for nailing development deals.

Find out more about development loans here.