A lender is a lender? A mortgage is the same as a development loan? Wrong on both counts and common misconceptions which are often banded around.
So what difference does it make whether a developer chooses the right lender, surely most lenders are the same and once you have the funds you won’t need any contact with them?
This is one of the primary differences between traditional lending and development finance, when it comes to choosing a development lender it is the relationship between you both that could be the difference between a successful and a failed project.
Why is this so important? Just because a lender enters the development market does not mean they have the necessary skills and expertise to offer the type of bespoke and flexible service that as a developer you will find vital. You need to be able to pick up the phone to an experienced person who actually understands you, your project and the inevitable challenges you will face from weather delays, difficult ground conditions, bats, hedgehogs, cost overruns and all manner of other issues which could put cause delays to your best laid plans.
You need to speak with and see your development lender on a regular basis, you need them to understand the nuances of your project and that no two projects are the same. By taking a personal interest in you and your project they will then be able to offer a facility that truly fits your individual needs.
You will be drawing down your facility in stages as you build and this is a key difference to more traditional lending where you have your funds from the lender and that is often the last time you will need contact with them until you are ready to repay the loan.
Development lending requires a much greater degree of understanding by the lender, it requires a specialist expertise that comes from years of experience in the industry and this expertise will be a valuable addition to your project and one you should not underestimate.
Do not accept a one size fits all approach, demand of your lender that personal and bespoke service that your project demands. It could be one of the most important choices you will ever make!