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Property Developing Mortgages Can Work Out Cheaper With A Broker

Feb 15, 2008
Property developing mortgages can work out very cheaper when you take the help of a broker. This is despite the fees that are associated with a broker. This is because a broker will have access to those lenders you do not have and are able to search with the entire marketplace if your circumstances warrant it. If you have secured the help of a specialist broker from the very beginning then not only can they look for the best and the cheapest mortgage but also help you put together your proposal.

What you propose to do with the property and the experience you have will go towards determining how much interest you will pay. Rates are usually set around 1.5% and 2.5% fluctuating on the individual. When it comes to how much you are able to borrow to finance your venture this will also be based on the individual. Very few property developing mortgages come with 100% backing. Lenders will take into account the size and type of venture, how much experience you have in the past and how successful you have been. The majority will usually offer between 70% and 75%. They are also likely to offer more funding if you put up extra equity towards the mortgage. This is essential if you are trying to seek 100% of the project.

Getting the planning permission for your project is very essential and you should never go for a mortgage before you have the paperwork. This should be included within the proposal as all lenders will want to see this before they will allow you to borrow.

The options for taking out property developing mortgages are a repayment mortgage or interest only. The repayment mortgage will work out dearer when it comes to the amount you will have to repay each month. However unlike the interest only when you have reached the end of the loan it will be paid in full. This type of mortgage would usually be offered for small projects.

If the project requires you to borrow in the region of tens of thousands of pounds then an interest only mortgage might be offered by the lender. The monthly repayments will work out cheaper when borrowing this way. The only drawback is that when you have paid off the mortgage there will still be the capitol left owing. This is a considerable sum and the lender will want the assurance that you have the necessary means with which to repay this in full. Mortgages can usually be taken over a period of 20 plus years down to 1 year and again this will all depend on how much you are borrowing and the size of the project you are taking on.

Help and advice on all aspects of property developing mortgages can be found with a specialist website. The majority offer FAQs pages and articles which give those starting out in property development an excellent start. Working alongside a broker is the best way to get the project started and to finalise it as quickly as possible.
About the Author
Sean Horton is a Director of Enhanced Wealth, a whole of market mortgage broker and IFA specialising in mortgage advice and the associated areas of income protection, mortgage protection, mortgage life cover and Property development mortgages .
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