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HSBC Property development Finance all about HSBC Property Development Loans, HSBC Bank is one of the largest banks in the world with offices around the globe, they moved into the UK banking arena with the acquisition of the Midland Bank and rebranded as the HSBC which stands for Hong Kong & Shanghai Banking Corporation, we are really not to sure if HSBC bank offer property development finance, we have never come across a developer who has funded a property development through HSBC, however if they do offer finance we suspect it would be on the same terms as the other big four high street banks, which tends to be up to 60% of land and development costs with your 40% of funding put on account or into an escrow account they would only then release their funds after yours have been deposited on account, they would also usually only ever offer to fund you if you were an existing client and or had previous financial dealings with the bank and under no circumstances would any developer without substantial experience and track record be considered for finance, obviously such rigid terms do not suit the vast majority of property developers who do not have 40% of the costs to put into an escrow account and or need to fund more than 60% of the development costs and even first time developers who want to get into to property development. The good news is that the high street banks are not the only lenders or service this marketplace since 2008 many more lenders have come to the market who offer property development finance and at far better terms and loan to value ratios than any high street lender would offer, also they will fund developers who are just starting out with little or no experience or track record.
HSBC Property Development Finance What Costs are involved?
With a High street lender such as HSBC Bank and arrangement fee would be charged which would equate to 1-2 % of the amount you wish to borrow this is sometimes called a commitment fee and you will be asked to pay this fee, once an offer to finance is made this basically commits you to the loan before the bank starts work on the valuation and legal process, this fee would not be refundable if at a later date you pulled out of the deal. With a specialist lender you would be charged an arrangement fee of 1-2% which you would only have to pay after you have received your finance, this allows you with far more flexibility, another fee a high street bank will expect you to pay is what is called an exit fee, this is calculated on the end value of the properties you are developing and can be as high as 2% of the gross development value, a specialist lender would not normally have an exit fee so the savings can be considerable, interest rates can look lower at a high street bank but you really have to take the overall package on offer and work it back to see what your true costs are going to be.
Other costs you will have to cover include a surveyor to be instructed by the lender to value the land/site as it stands and also the end value of your development and look at your proposed development costs to see if the figures all stack up in addition you can expect to pay for your own solicitors Fees and also the legal fees of the lender, these will all be agreed before the loan proceeds.
Target Mortgages have been arranged property development finance for over 20 years and the directors are also experienced property developers this puts us in a unique position in that we can immediately tell you what funding would be available to you and also help secure you the best deals in the market.
We are here to help you every step of the way and understand the industry inside out, so get in touch today, you can give us a call anytime or contact us via chat or our contact form.
Property Development Finance is not Authorised or FCA regulated.