It is evident that today’s ‘vanilla’ bridging market is becoming increasingly saturated. As a result, a number of bridging lenders are looking to broaden their offerings and some are doing this by diversifying into development finance. However, it takes a special type of lender to lend on a full scale development project. Development finance is one of the risker areas of lending and problems can arise when a client borrows money from a lender that doesn’t fully understand what is involved in these types of projects.


When a project involves demolishing a building before a new one is built, there is a period of time when the borrower will have nothing but a hole in the ground which may be worth less than when it was first lent on. However, a specialist lender who understands exactly what is involved can step in and help if the project goes off track or if any issues arise, and this is why selecting the right development finance lender for your client is absolutely imperative.


When choosing a development finance lender, brokers should not only look into fees, charges, flexibility and speed but should also find out whether their strengths lie in offering clients tailored solutions to get the best results. This individual approach to lending means such lenders can offer support to brokers and assist property developers to help match the client’s requirements to the most suitable loan product, so it is worth exploring all the options before turning a client away.


Development finance lenders will examine each case on its own individual merits because every transaction is different. A good lender will have the required market knowledge and experience to offer the best advice. Development finance is a buoyant market which means there is a lot of opportunity for brokers to add this to their scope of service as well as their client base and income while ensuring better customer outcomes. This can be achieved by partnering with the right specialist lender.


It is clear that having the right knowledge and access to the best resources and products is a key factor and, because the specialist sector is becoming an increasingly vital component of the lending market, it is no surprise that the amount of brokers referring niche cases to specialists is on the rise.


Benson Hersch, CEO of the ASTL


A version of this article was published by Mortgage Solutions in May 2016