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Residential Property Development Finance

Residential property development finance is the loan offered to people who want to upgrade their properties or buildings or build a completely new project. These are loans offered for small scale projects and also large scale projects. In case of mortgage lending there is a fixed rate of interest but in case of residential development projects there are no such things and you can always negotiate with your lenders to get the best rate. These finances are available to builders and the rate depends on their experience in the field, the services offered by them and their past credit history. The following are some of the key facts that one has to know to get more awareness about residential property development loans.

1. The rate of interest for these loans is basically within the range of two to four percentages plus the bank base rate.

2. The person who is availing the loan has to pay a deposit of thirty five percent of the actual worth of the project. This might vary with different lenders. This is basically dependent on the experience of the builder. If the builder is very experienced and reputed, then he probably might not be required to pay the thirty five percent of the loan and can avail it at hundred percent finance.

The people who can avail these loans are individuals, builders, partnership or limited companies, trusts, etc. There is such a variety of people borrowing because most of these projects are very different and unique from each other.

The following are some of the advantages of availing loans for residential development projects:

1. The loan that the builder gets includes everything right from land costs, building costs and marketing costs.

2. You need not borrow the entire loan amount in the beginning itself. You can borrow some amount in the beginning; use that money for the current period’s operations and then borrow some more money again in the next month depending on the work due.

3. The interest rates are variable and they can be altered depending on the needs and requirements of the dealing parties.

4. Residential project development loans not only consider green field projects but they also consider brown field, renovation, refurbishment projects, commercial and non commercial projects.

5. The amount of interest to be paid can be done monthly, quarterly or even along with the payment after having done the entire construction. So this provides more flexibility and there is no real pressure to the builder.

6. There are different loan packages available and they can be availed depending on the requirements of the builder.

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