Architectural builds can be uniquely tricky property development projects. Often involving the construction, expansion or redevelopment of properties in challenging locations, there are countless costs that need to be taken into account.
From initial site surveys to preparation of the site to the complexities of the build itself, architectural builds are unlike conventional building projects. They also call for the start-to-finish involvement of skilled architects, who may be pushing the limits of what’s possible with their latest vision.
Given the complexities inherent with architectural builds, comprehensive forward-planning is key. Particularly when it comes to financing the project and considering the various sources of funds available.
More often than not, traditional mortgages and business loans are out of the equation for the more ambitious architectural builds. Nevertheless, architects and developers have an extensive portfolio of specialist lending products to explore – most of which are unavailable from major High Street lenders.
For example, bridging loans represent an accessible, affordable and convenient option of financing architectural builds. Unlike traditional mortgages and property loans, the bridging loan can be lent against the value of almost any existing property, properties in development and even land. The viability of the collateral provided by the applicant is typically the only criteria used to establish eligibility. A bridging loan can be accessed within a matter of days and repaid a few months later, with monthly interest rates as low as 0.5 per cent and minimal overall borrowing costs.
General Secured Loans
There’s also a growing market for specialist secured loans for developers and investors in the UK. Again, these loans primarily consider the applicant’s equity or more general assets, against which the funds may be lent. Some exclusively accept qualifying properties, others are willing to accept a wide variety of assets and possessions as security. Business assets, jewellery, automobiles, fine art and so on. If the combined value of the borrower’s assets comfortably covers the loan and all applicable borrowing costs, the application may be accepted. The more general secured loans for financing architectural builds can be repaid over the short-term or long-term, in accordance with the requirements and budget of the applicant.
Specialist Development Finance
The difference with specialist development finance is the way in which the funds are released gradually as the project progresses. One of the key benefits of a specialist development finance loan is its flexibility. Each loan is meticulously tailored to meet the exact requirements and preferences of the client and their development project respectively. In all instances, a specialist development finance solution can be extremely cost-effective and a convenient option for architectural builds.
Locating an appealing to viable investors loan is also an option, though can be time-consuming and comes with no guarantees. If you intend to fund your architectural build through private investment or P2P lending, it’s worth doing so under the advisement of an independent expert.
Short-Term Vs Long-Term
One of the most important factors to consider when comparing funding options is the preferred length of the loan term. Where possible, paying back a bridging loan as quickly as possible could result in the lowest overall borrowing costs. If you don’t have a viable short-term exit strategy, spreading the costs with monthly payments for several years could be a better option. Short-term lending typically opens the door to more competitive borrowing costs, though this isn’t always the case.
Compare the Market
Your eligibility and suitability for the various options available will be determined by your objectives and your current financial position. In order to ensure you access the best possible deal for your property development project, you’ll need to compare as many options as possible from an extensive network of specialist lenders.
Consult with an independent broker and organise a whole-of-market comparison, based on your requirements and your budget. Carefully consider the available options beyond the usual High Street names and you could find an affordable solution for your project.