Property Development – How to Maximise Your Profit

Established property developers and letting agents, or anyone searching for a property development opportunity, need to focus on generating the highest return on investment from their projects. Now is an ideal time to start a property development project as you can make significant savings like never before, and here’s how.

1. Find Property Development Opportunities at Property Auctions

The benefits of buying property from an auction are huge. It’s possible to sweep up property below its open market value. There is also no larger marketplace of properties which can be renovated or converted for profit. There’s also no quicker way to find property development opportunities than at an auction, as the completion date fixed at 28 days from when the gavel drops.

It’s also important to carry out research before attending a property auction. Legal packs are available online prior to the auction. These packs include documentation gathered by the auction house and the seller’s solicitor. The packs include title deeds, relevant searches, planning permission, and tenant leases. There is no cost for viewing these documents, and it could save you buying a property with massive structural issues.

2. Stamp Duty Holiday Deadline

If you purchase property for £450,000, you would pay £13,500 in stamp duty charges. In contrast, you could now buy a property worth £463,500 without paying anything extra. The are no plans to extend the stamp duty holiday past the end of June. If you are searching for a property development opportunity, you will need to purchase your property before June 30th. You can check if any stamp duty is due by using this stamp duty calculator.

It’s also worth exploring a Bridging Loan, as these can be used to raise finance quickly. You can purchase property quickly and not have to wait for the mortgage lender and solicitors to complete. You can purchase the property in cash with a Bridging Loan, and guarantee that you make the savings.

3. Reduce Interest Rates

It’s always best to source finance that avoids high interest rates if possible. For those property developers that do buy with a mortgage or loan product, aim to get the house completed ASAP and sold on to fund your next project. Once you have raised finance, you can become a landlord to help offset the costs of future development projects.

Mortgages are often the best, low-interest source of funding for property development, however if you have a bad credit rating, it might not be an option. However, we can support property developers with most credit histories.

4. Seek Professional Advice

You may feel you have all the information you need for your property development project, and don’t need expert advice. Paying for professional financial advice may seem like an initial unnecessary cost. However, speaking with an independent mortgage advisor will help you find the best rates when raising finance and will give you access to most exclusive rates on the market. You are likely to save money in the long run and save time as the professionals will be doing all the work for you. Having a professional advisor supporting your project will give you peace of mind and they will offer invaluable advice which may make the process simpler and easier.

Friends Capital are independent and unbiased mortgage and loan specialists. We are experts in the field of financing property development, buy-to-let mortgages, HMO’s and funding residential renovation projects. We have access to the whole of the specialist finance market, and we also have access to exclusive deals with the leading, most established, and trusted lenders. If you would like to discuss your situation with us and discuss your property development project, you can email us at info@friendscapital.co.uk or call us on 0800 862 0811

How long does it take to get a bridging loan?

If you are looking for a bridging loan, then one of your concerns or questions will likely be about how long it takes to get a bridge loan.

Generally, from start to finish, the whole process can take a couple of weeks. However, it depends on the organisation of the broker, lender, and borrower.

The most convenient approach to attaining a bridging loan without delays is to fill out our application form and wait for a member of our team to call you back, which we are passionate about doing the same day. 

However, if you are looking to accelerate the process, you can follow these three steps:

• Plan ahead: You should organise what you need for the application, put together your repayment plan, and prepare copies of documents such as …. (Awaiting info from client). We recommend scanning and emailing these rather than posting them, as this again cuts the time down by several days. It also saves on the costs of first class postage and tracking. You can complete this step over the weekend when most brokers will be closed.
• Get in touch: You can email us all the information you have gathered and then call us up as soon as it has been sent to speak with one of our unbiased financial advisors. The financial advisor will ask a few questions to validate the information you have provided and offer the right product and solution. If you do this on Monday, you will improve your chances of approval in the same week.
• Exercise patience: We appreciate that you are excited and impatient about getting your finance in place. However, you can sit back and relax for a while why we get everything in place and arrange the transfer of funds. With COVID affecting lenders and solicitors and with heightened demand for bridging loans, the process currently takes 2-3 weeks, from start to completion.

Preparing your repayment plan

Also known as your exit strategy, the repayment plan should state how you intend to repay the loan at the end of the agreed term. Your exit strategy might include:

• Selling a property, you own.
• Receiving an inheritance.
• Refinancing the bridge loan with a regular mortgage.

If your repayment plan is to sell a property, the lender will want to arrange a valuation to ensure there is enough equity (money left over after repayment of any outstanding mortgage) to repay the bridging loan. If a remortgage is the intended exit strategy, then a decision in principle will be required as evidence that you can obtain the remortgaging finance.

Preparing to speak with our financial advisors

If the financial advisor determines that a bridging loan is the right solution, they will contact you to take brief details of the property involved, how much you intend to borrow, and what your exit strategy is. We will then approach the best lender to get a decision in principle on your behalf.

What about bad credit bridging loans?

Friends Capital helps clients find homeowner loans with bad credit. Homeowner loans with poor credit are not impossible to get approved because a bridging loan is offered based on the equity in the property or asset.

What about the stamp duty holiday deadline?

The stamp duty holiday is ending on the 31st March 2021. The government has confirmed that there will not be a stamp duty extension. There should still be time to arrange a bridging loan before the deadline, but you should not delay getting the process started.

If you follow our tips for accelerating the bridging loan process, you will acquire your funds in the quickest time frame. Please contact Friends Capital to further assistance.

Bridging Loan Application Form

How long does a mortgage application take

The length of time for a mortgage application to be approved is lengthening. The longer timescale is creating application anxiety for many eager homebuyers. Here we take a look at why the mortgage application process is lengthening, how long it will take, and what you can do to have your mortgage complete sooner. 

Why mortgages are taking so long to complete

The first reason that mortgages are taking longer to complete is that lenders are much more cautious in light of the COVID-19 epidemic and economic uncertainty. A more cautious approach with more stringent checks means that lenders take a lot longer to approve cases. Also, solicitors are working from home, and this is slowing their part of the process. 

A second reason for longer mortgage completions is strong demand due to the stamp duty holiday. The holiday means that stamp duty land tax (SDLT) is charged on properties over £500,000 instead of the usual £300,000. The stamp duty holiday deadline is 31st March 2021, and the government has ruled out a stamp duty extension.

How long did mortgages take to complete before COVID / how long do they normally take?

Property purchases used to take about 2-4 months, and remortgages used to take about 6 weeks from start to finish. Property searches used to take 2-3 weeks.

So how long will they actually take?

A property purchase takes anything from 3 months to 12 months, depending on the chain and choice of the lender and solicitor. A remortgage takes about 3 – 6 months now, and property searches are taking about 6 weeks.

How to get a mortgage completed quickly / sooner

Good planning and preparation will ensure your mortgage completes quickly. You can check your credit file beforehand and send Friends Capital a copy to ensure no time is wasted placing the case with the correct lender. You should ensure all correct documentation is ready to hand and chase your solicitor to keep the case moving.

Bridging loans

If you are anxious to move into your new home or meet the extended stamp duty holiday deadline, then a bridge loan may be the solution you need. A bridging loan provides short term finance so that you can move quickly. You can then refinance this loan with a mortgage after you have moved.

Bad credit bridging loans are also available. You can discuss homeowner loans with bad credit with the experts at Friends Capital. We have established strong relationships with lenders who specialise in home owner loans with poor credit, helping you get the finance you need.

Apply for a bridging loan today