For many people there seems to be little option but to build their own home. It can be considerably cheaper than purchasing a property in the current market. You’ll also gain the advantage of being able to design your property exactly as you want it; whether you’re after a tiny house or a full scale mansion. But, it still costs money to build. It doesn’t matter if you’re building one house or a tower block; you will probably need finance.
Here are some tips to make sure you get the right deal:
1.) Find The Right Capital Partner:
Financing a construction project is a specialized market. You need to choose a firm that offering specializes in corporate finance. These are the firms that will help you to find funds even when the high street banks won’t lend to you. The reason is simply a matter of risk; it’s risky lending funds on something that hasn’t been built yet. Mainstream lenders have nothing to secure the loan on; capital specialists know how to deal with this issue.
2.) Have A Deposit:
Due to the risk it is highly unlikely that you’ll find any firm willing to lend you money for construction unless you are able to put down a minimum of 20 – 25% of the cost. It’s important to note that this is the overall cost including design, planning and the build. Finance companies generally expect you to pay the upfront costs and they will then release the funds in stages throughout the build.
Construction finance doesn’t work in the same way as a traditional mortgage or secured loan. It is there to help you construct a building. After the building is finished you’ll have a set time to repay the funds. This is usually about a year. During that period you’ll either need to sell the properties you’ve constructed or arrange a traditional mortgage to enable you to repay the funds.
4.) Take Advice:
It is essential that you take legal advice before you take out any construction finance. There are many potential barriers to your build that may not seem apparent when you start. You’ll also find that certain issues arise, such as utility pipes; that can really slow down your build time. The consequence can be serious for your existing finance deal. Make sure you know all the ins and outs before you start by speaking to a certified solicitor.
Your heart is probably set on creating the dream house or building project. However the reality is that things can go wrong and often do. Before you start constructing or commit to any project it is imperative that you take you insurance. This will help to protect you from financial ruin; no matter what goes wrong. It can also save your reputation allowing you to start a new project and learn from your mistakes; if necessary. It doesn’t matter if you’re a business or an individual; these tips can help you to finance your construction project and keep the build running smoothly.