All You Should Know About Development Loans


All You Should Know About Development Loans

You want your own dream home. But you don’t want to purchase one straight off the market, instead, you’re looking to build one. Congratulations! Let us tell you firstly that what you need is a development loan for constructing your home. Unlike home loans which are given as a lump sum to buy homes, development loans are short term loans which are provided in instalments during the construction phase.

Depending on your financial situation and goals, they may be very helpful. Read on to understand everything that you should know about development loans.

What exactly is a development loan?

  • One thing you have to understand about development loans are shorter-term but higher interest loans that are not based on the fair market value of the home but on the projected value of the property once the construction is complete.
  • These loans are provided as instalments to you during each phase of the construction. The funds provided at each phase helps the builder to utilize the same to cover costs before he/she moves on to the next phase of the construction.
  • It is not common that the bank/lender will inspect the construction for every phase before the funds are provided to the builder. Not only that, the timeline of the builder with respect to the construction will also be checked. What this means to you is that you should always put in your research to identify a good and reputed builder for your project before applying for a development loan. Find a builder that is reputed for timely construction and who is well adept at budgeting funds and scheduling as well.


Benefits of development loans

While it may appear that development loans come with a lot of strict procedures and inspection, you may be surprised at the benefits that they offer you.

  • Since the loan amount isn’t given to you throughout the construction phase, the bank expects you to start paying the principle only at the end of the construction. You have to make only lower interest payments through the development phase. This gives enough time to save money, don’t you think?
  • One big advantage of development loans over traditional loans is that they are a lot more flexible with respect to loan terms and guidelines. To a great extent, you’ll also be able to work your loan terms suited to the specific needs of your project.
  • While you may have gotten the idea that there is a lot of scrutinies involved in development loans, consider also their benefits. They ensure that not only is your building process stays on time, but also that it stays under the stipulated budget.

Development loans are a great way to finance your construction dreams. However, you also have to keep in mind that they require a little more research and proper planning. Experts like us, who have experience in securing the best deals out there for hundreds of customers, can help you too.

All you have to do is buzz us at +44(0) 203 489 4747 or just drop in a mail to

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  • 12 Apr, 2019
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