There is no denying that property development faces many unexpected issues which can frustrate developers. It is easy to think that these issues are common in poorly planned projects, but they arise in even the well-planned and managed ones. Property development projects are susceptible to these problems because many things can go wrong with your initial plans.
For instance, the construction crew you prefer for the task can be overbooked when the time arrives, leaving you a bit stranded. Additionally, an essential supplier may fail to deliver as anticipated, or your project can stall due to bad weather. However, the combined effects of Brexit and the coronavirus are responsible for most construction delays in the country these days.
You may be forced to pay huge penalties when you encounter these hindrances if you take out development finance for your project. Still, you can avoid these additional fees by choosing development exit finance. Below are some tips you can follow to refinance a property development project successfully.
When Should You Refinance Your Property Development
You have numerous options to consider when refinancing your development project as a property developer. Consequently, take time to review these options before deciding whether refinancing your development project is ideal for you. Also, look at your current project’s conditions and terms and whether you will incur extra costs should you refinance, even if you can face a net loss. Furthermore, consider whether you can make your payments fully and timely and whether there is enough room for adjustment.
Generally, experts agree that you can consider refinancing a project if you have worked on it for at least nine months. After this time, you can be sure about your chances of meeting any deadlines without any setbacks since the project should be nearing completion. If you doubt your chances of meeting your deadlines, you can consider debt consolidation options as many developers would.
Stretching Your Terms
You can expect a 12-month term for this loan since it is the case in most situations. This short term can lead to timetable setbacks, especially if you experience issues when closing or during the process of construction. Therefore, it is prudent to have a property refinancing commitment on your own or via a finance broker like Finbri. Also, ensure that the company you choose will allow you to finish your project ahead of time without charging fees.
Lessening Your Costs
Consumer loans have higher interest rates than other forms of property development finance, so it is easy to save big on your borrowing cost if you are undertaking a construction project. Additionally, you can easily commit all your resources to complete your project since the interest that builds up on your loan exit is kept.
Is It Time To Refinance?
Property developers can refinance for various reasons, including avoiding costly penalties for project delays and starting their next project with ready funds. Many developers seeking cost-effective ways to finance their development efforts often turn to refinancing to acquire a site and start planning and designing while still taking on a project.