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By Pete Mugleston | Mortgage Advisor

Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 19th October 2020*

We hear from lots of customers who want to know about development finance calculators, namely how they work, where they can find an accurate one and exactly how a commercial lender will use one to draw up a quote for them.

We’ve put together this guide to development loan calculators to answer those questions and more, and you’ll find the following topics covered below…

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What is a property development finance calculator?

A development finance calculator is a tool a lender would use to determine what kind of quote they’d be willing to offer you for a development finance loan.

Every lender will have their own in-house calculator, and some are more sophisticated than others. You can find development finance calculators online, however, these will only give you a very rough estimation due to the fact your finance needs will be so specific.

For a more accurate calculation, get in touch with us. The experts we work with will be able to suggest financial solutions that are tailor-made to your needs.

How does a development loan calculator work?

The finance provider feeds information into the calculator, including the total amount you need to borrow, your deposit amount, how many stage payments you need and the length of the term. The calculator will crunch those numbers to provide a clear picture of the development loan’s overall cost.

Development finance lenders will want to know what the project’s gross development value (LTGDV) will be as well as the loan to cost (LTC), and they will use those figures as a starting point to calculate how much they’re happy for you to borrow.

The numbers the calculator returns will likely factor in the interest charges and fees, and the lender will make a decision on whether the loan is affordable based on the strength of the borrower’s exit strategy, which would usually be a remortgage or the sale of the scheme.

Where can I find a reliable development finance calculator?

You can find one on many development lender’s websites and other online financial hubs. One thing you might find, though, is that the quote you receive will vary from one development finance calculator to another, sometimes significantly. They may also fail to factor in additional costs such as re-valuation fees as these vary significantly between lenders.

This is because every lender uses a different calculator and some are more sophisticated than others. Rudimentary ones will simply return a quote based on basic information, such as the loan to cost (LTC), gross development value (LTGDV), your deposit and the term length, while more complex calculators will take variables such as the following on board…

  • Your credit rating
  • How much industry experience you have
  • The viability of the investment
  • The quality and experience of any contractors or tradesmen to be used

All of the above can affect the level of risk the lender is taking on, and therefore may have an impact on the rates you end up with and the amount you can borrow.

Commercial property development finance calculators

Some lenders will use specific development finance calculators for commercial deals, but the rates you will end up with and how much you’re eligible to borrow will come down to many of the same factors, such as the strength of your exit and your profile as a borrower.

As is the case with all development finance deals, the calculators that commercial lenders use can vary in their complexity and return different results.

Make an enquiry and the advisors we work with will connect you to the lender best positioned to be flexible and favourable when calculating how much you’re able to borrow.

Why do I need a specialist development finance broker?

One of the main reasons you should seek expert advice from a whole-of-market broker is because the calculator one lender users can bring up different results to another.

Development finance calculators vary in their complexity, and it’s hard to know which provider is most likely to offer you a favourable deal based on the numbers they return.

The advisors we work with can search the market on your behalf and pair you up with the lender whose calculator is most likely to return favourable figures for a customer with your needs and circumstances. What’s more, these expert brokers are specialists in development finance and can offer you bespoke advice about your project and how to fund it.

Make an enquiry to speak with one of them today.

Get accurate development finance calculations from an expert broker

If you have questions and want to speak to an expert for the right advice, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry online.

Then sit back and let us do all the hard work in finding the development finance broker with the right expertise for your circumstances.  We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

Updated: 19th October 2020
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FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.