Pete Mugleston | Mortgage AdvisorPete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.
Updated: 4th July 2019 *
Many of the customers who get in touch with us to enquire about development finance are keen to know whether it is available in specific parts of Britain (and even further afield), and if the rates and criteria are any different from one region to another.
That’s why we’ve put together this guide to development finance in Scotland, Northern Ireland and other locations, and you’ll find the following topics covered below…
If you’re looking for information about development finance, the brokers we work with are experts in finding solutions to suit your location. Call us on 0808 189 2301 or make an enquiry and we’ll put you in touch with someone for a free, no-obligation chat.
Can I get development finance in Scotland?
Yes, as long as you’re eligible for development finance it is possible to find a lender who’s willing to offer it for projects in Scotland. The only real difference compared to development finance lending in England is that you may encounter postcode restrictions.
Some development finance providers won’t lend for projects in the Scottish Highlands or away from the mainland, and the minority that will may offer unfavourable rates or cap the loan to value (LTV) ratio, depending on how risky they think the venture is.
So your choice of lenders will be fewer but that doesn’t mean finding a good deal north of the border is impossible. With a whole-of-market broker, all of the best products you qualify for will be on their radar - make an enquiry to speak with one over the phone today.
Can I get residential development finance in Scotland?
While it will be more difficult to find, the answer is still ‘yes’.
Although development finance is more commonly used to fund commercial undertakings, some lenders offer it for residential developments as an alternative to self-build mortgages.
Given the postcode restrictions in Scotland and the fact residential development finance is less common, it’s essential to seek whole-of-market advice before pursuing a deal of this nature, as that’s the best way to ensure you’ll land the best interest rates.
For niche deals like this, it’s also important to meet the finance provider’s lending criteria as closely as possible, to keep the level of risk to a minimum. You can read more about what lenders look for in a borrower in the ‘eligibility criteria’ section of this article.
Can I get property development finance in Northern Ireland?
Development finance deals are generally more difficult to transact in Northern Ireland as fewer lenders operate there - but it’s by no means impossible to get one.
With commercial lending (the category most development finance loans fall into), applications are usually assessed on a case-by-case basis, so every lender won’t necessarily give you an outright ‘no’ if your project is Ireland-based. Some may turn you away, but others might weigh up the viability of the investment and the level of risk.
Development finance loans in Ireland can come with higher deposit requirements and less favourable rates as the number of approachable lenders is fewer compared to mainland UK. This is why it’s essential to seek whole-of-market advice first, to give yourself the highest chance of finding the lender best positioned to offer you a good deal.
What other locations is development finance available in?
As well as being available across the UK (with some postcode restrictions), development finance loans are available for international investments from a small minority of lenders.
While most high street providers would be wary of a borrower whose plans involve overseas development, it may be possible to find an international lender with a higher appetite for risk, if you search the market through a whole-of-market broker.
What is the eligibility criteria for development finance?
If you’re looking for a development finance loan in a UK territory where there aren’t too many lenders, such as Scotland or Ireland, there are two things you need to know. Firstly, you should apply through a whole-of-market broker to make sure you end up with the right deal, and secondly, you’ll need to meet the eligibility criteria at as many lenders as possible.
Development finance applications are usually assessed on a case-by-case basis, but lenders tend to reserve their most favourable rates for borrowers with the following…
A strong exit strategy: As development finance is usually offered on a short term, interest-only basis, the exit strategy (i.e. how you plan to pay the debt off at the end of the term) is of vital importance. In most cases, this would be a remortgage or the sale of the scheme post-development. The more certain your exit strategy is to raise the required amount, the better your chances of getting favourable rates.
A healthy deposit/good security: Most development finance lenders offer 70-75% of the funds needed for the initial site purchase and 100% of the development costs (released in staged drawdowns), but if you are in a position to put down a higher amount of deposit or put up extra security, this can lower the level of risk and convince lenders to offer more favourable rates. Deals with a 100% loan to value (LTV) ratio might also be offered to borrowers who put up extra security.
Clean credit: Bad credit is not always a deal-breaker to development finance lenders (unless it puts the exit strategy at risk), but having no blemishes on your credit report will usually help convince the provider that you’re low risk.
Experience in the relevant field: Lenders like to be confident that a borrower’s plans are achievable, so having a strong track record in construction and the relevant industry will usually help convince them you will achieve your goals.
Above all, the lender will want to see that the investment is viable, and they will determine that by looking at the above factors as well as variables such as location, as this can have a direct impact on how much a scheme will sell or remortgage for post-development.
Speak to a development finance expert
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.
Then sit back and let us do all the hard work in finding the 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.
*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 info 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.
Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes.
The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete's presence in the industry as the 'go-to' for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!
Read more about Pete here...