Whether you are seeking residential loan, commercial loan or even the development loan, GOP Mortgage Solutions can have the solutions for your lending needs.
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What is a property development loan?
A property development loan is a loan designed to fund the construction of multiple properties on one title. For developments of up to four units, such as duplexes, triplexes and townhouses, funding is available from residential property development loans; if you’re planning on building a larger project you will need a commercial property development loan.
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Residential or commercial?
One of the key issues to contend with when obtaining a loan for a property development is whether or not you will need a residential or commercial loan. However, whether the funding is arranged as commercial or residential lending depends on the number of properties being built.
Small developments of four units or less will typically qualify for residential lending, which should make the loan application process much simpler. If your property development project is for any more than three or four units, it will fall into the commercial lending category. This will have a significant impact on the paperwork you need to provide to access funding, and also affect the loan features you are able to access.
If the loan is classed as commercial, you can expect to pay a higher interest rate than you would on a residential loan for property development. You will also have to contend with a different fee structure than applies to residential loans. Banks take a much more conservative approach to commercial lending, which means you’ll need to provide a range of details and extra information in addition to meeting the standard criteria that apply to a residential loan.
