The products, processes and risk involved in property financing

Abstract

Obtaining financing for property development is of fundamental importance to the development process. If the financing for a project cannot be secured, the project cannot continue. Property development is generally financed through a combination of owner’s equity capital and debt capital. The methods for obtaining financing for property development are diverse. However, with a larger part of property development normally being financed through debt equity, lending institutions play a major role in the property financing business. These lending institutions have a number of products available which are diverse and range from standard to customize and are complex in nature. Lending institutions generally also have a standard process which they follow to obtain the information required to approve the debt capital needed by the property developer. This is a process developers sometimes have little understanding about and consumes a large amount of resources.