Real Estate Resources

Many people regard 100% Real Estate modernisation mortgages as the holy grail of property funding. So it is not surprising that it is one of the most popular types of loan. We should say right at the outset that getting 100% Real Estate modernisation mortgages is possible, however there are several important criteria that a bank will look for.

The project must demonstrate a substantial profit. It does not matter if it is a renovation or development scheme, but either way the end value will need to show at least 25% return on costs. For a crude guide simply add together the purchase price and development (or refurbishment) costs then multiply by 1.25 So if a site costs 200,000 and the development costs are 33,000 the total costs are 233,000. The sales price would then need to be at least 295,000. although this is a very rough guide but it does give a good starting point.

The next major question that a bank will ask is "why is the customer asking for 100% Real Estate mortgages?" Although it is not unusual for a property developer to have all their available capital tied up in one project whilst looking for a new scheme, there are a number of other acceptable answers. The challenge comes when a customer asks for high levels of finance with no provable experience and little support.

As time goes by a property developer will form a team of professionals to support them, this will consist of suppliers, trades people and specialists such as architects, quantity surveyors and solicitors. This team becomes an asset and a experienced team can go a long way towards persuading a bank.

Some specialist property funders will work with banks to provide "top-up" finance. The result is 100% modernisation funding, but from two difference sources. However there are also some property funders who will lend all the funds. Either way 100% property development finance can be a very specialised form of lending and using a specialist finance broker can really help.