14 Mar When Property Development Refinancing Makes Sense
Property development projects can face setbacks due to numerous reasons ranging from bad weather to a vital supplier not delivering as promised. However, the recent construction delays in the UK are generally due to the combined effects of the coronavirus and Brexit.
If your project utilises developer finance for funding, any delays can result in large fines and other penalties for not meeting the agreed terms on the loan. Thankfully, you can take out development exit finance to escape any fines and complete your project. Here’s when property development refinancing makes sense for you.
When Is Refinancing Your Best Option?
When you’re not yet ready to exit your development finance or bridging loan but the term’s nearing its end, refinancing gives you the opportunity to finish your project, sell your asset or arrange funding via traditional finance routes – whilst avoiding any late fees for the original loan.
Speed is a factor so if you anticipate the need to refinance your project, it’s always the best option to arrange refinancing as quickly as possible. This will not only protect your project but help you to secure the best deal.
Prolonging Your Terms
Many developers receive a 1 to 2 year loan term when they opt for this financing. However, a one-year loan term might be too short and you may have schedule delays, especially if there are issues during building or property closing. Consequently, consider getting a property refinancing commitment through a renowned broker such as Finbri.
Trimming Your Costs
The interest rates on various types of development finance can be less than that of consumer loans. Therefore, saving significant funds on your borrowing costs is possible when tackling construction projects. Furthermore, it is also easier to pump more funds towards completing your project since the interest that adds up on your loan exit is kept.
Is Now The Best Time To Refinance?
Refinancing can help you avoid penalties that come with project delays. If your development finance or bridging loan is nearing it’s end, you should consider refinancing right away.