Property developers utilise a variety of development finance methods to fund acquisitions and investment projects. Development finance is a type of loan which is secured against the property or land in much the same way as a traditional mortgage. Some companies will also secure the finance against their company’s assets, as it is generally a short term loan in comparison to mortgages. At the end of the term of the loan, the properties are usually either sold or refinanced in order to pay the financier(s) back.

Property development companies only seeking development finance from banks and investment houses is a day of the past. In today’s current climate, private investors can lend funds to a developer for a fixed amount of time with a fixed rate of return allowing them to reap the rewards of development finance. 

There are strenuous levels of security in place enabling the investment to be secured as well as the terms of the contract being chosen by the investor. These transactions can be structured in multiple different ways; joint ventures, property bonds or direct loan agreements.

Investing in development finance enables investors to invest in the security of the property market, without the complications of being a landlord, while still benefiting from high returns.

There are multiple forms of development finance utilised by developers. From your traditional mortgage through to bridging loans. Optima Wealth UK allow investors to be the ‘bank’ and lend funding to experienced developers. Investors can see the benefits of a hands off investment through Joint Ventures, Property Bonds, Loan Note Agreements or bridging loans.