At CrowdProperty, we understand that securing the right funding is a critical step in any property development project. Whether you’re building from the ground up, refurbishing or converting a property, having the financial backing to bring your vision to life is essential. However, we also recognise that the loan application process can feel daunting without the right preparation.
In this guide, we’ll explore what the loan application process typically involves and share practical advice to help you significantly improve your chances of success.
What does a typical loan application involve?
At CrowdProperty, we pride ourselves on making the loan application process as clear as possible.
Online application
It all begins with an initial enquiry. Developers submit an online application and provide essential details about the project, such as the loan type they’re seeking, planning permission status, project specifics and financial projections.
Instant Decision in Principle
An Instant Decision in Principle (iDIP) is then issued*, which delivers an answer in seconds over email. This provides immediate clarity and saves you valuable time.
Within 30 minutes, a member of our Developer Support Team will get in touch to outline the next steps.
More detailed assessment
The next phase is a detailed assessment. Here, we conduct a deeper evaluation of your project’s financials, feasibility, market conditions and your experience as a developer.
Formal offer
If your project meets our lending criteria, we issue a formal offer letter outlining the loan terms.
After your acceptance of the formal offer, we appoint an independent monitoring surveyor (IMS), and you and we each appoint lawyers. Once everything is in place, the first tranche of funds is disbursed according to the agreed terms, enabling you to move forward with your plans.
How can developers improve their application success?
From years of experience working with property developers, we know what makes a loan application stand out.
Preparation
Preparation is key. Doing your research before submitting an application is critical. You should have a clear understanding of the basics, such as the property’s current value or asking price, the cost of works, Gross Development Value (GDV), loan term and exit strategy.
It’s also important to think carefully about your target market for sales or rentals. Ensure that you’ve factored in all costs, including finance and project expenses. In short, does the deal stack? A well-thought-out plan and a clear understanding of these fundamentals are vital for success.
Timing
Timing is another crucial factor. Starting your loan application before January offers developers an advantage. The beginning of the year often sees a surge in applications, which can lead to delays from external third parties. By applying now, you avoid the rush and position yourself for faster processing.
The market
Staying attuned to economic trends and market shifts can also influence your success. Being aware of influences on buyer appetite and finances – such as changes to mortgage interest rates or market uncertainty due to government budgets and elections - allows you to adapt your strategy and overcome potential challenges. Engaging with our team early on your strategy is one of the best ways to prepare. We offer no-obligation conversations to discuss your project and provide guidance before you apply.
Potential profitability
Demonstrating a strong Profit on Cost (POC) is another critical component. A clear and realistic POC calculation highlights the profitability of your project, which is a key factor in securing funding. If you’d like to learn more about calculating POC, we’ve covered this in detail here.
Credit-worthiness
Your financial credibility is also important. Maintaining a good credit score and demonstrating financial stability helps reassure us that you can manage loan repayments effectively. If you have credit score issues, talk to us before applying and, ideally, take steps to address issues before submitting your application.
By taking the above steps, you’ll enhance your chances of loan application success and be well-prepared to move your property development project forward with confidence. Remember, there’s no time like now to begin your loan application. By starting early, you can avoid the January influx of applications.
Contact CrowdProperty today to discuss your project and see how we can help you achieve your development goals. Call us on 02030120166 or email us at [email protected].
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