Private construction finance

Funding from a non-bank or private lender, secured by a mortgage over the development site. The lender assesses the asset and the exit rather than mainly your income, and the facility runs for the length of the project rather than for years. Interest is usually capitalised into the facility instead of being paid monthly.

Speed, and appetite. Private funders will look at projects a bank's credit policy excludes, including sites with no presales, unusual security and short settlement timetables. They cost more, so the question is always whether what you gain in time is worth what you pay for it.

Yes, and the gap is real rather than marginal. What decides whether it is worth paying is the total cost over the actual term of your project, including the holding costs of waiting. A facility that costs more but settles sooner is sometimes the cheaper outcome, and sometimes it is not.

Faster than a bank, and how much faster depends on the lender, the security and how complete your file is. Nobody can honestly put a date on it before seeing the project. What we can do is tell you which funders move quickly on a file like yours and what they will need from you to do it.

Often not, which is one of the main reasons developers use them. Non-bank and private lenders will frequently fund without presale cover at a higher cost. On a smaller project with a strong site, the cost of moving without contracts is sometimes less than the cost of waiting for them.

The site, the feasibility and the exit. They are lending against an asset and being repaid from something specific, usually the sale of completed stock or a refinance, so the credibility of that exit drives the terms. Your income matters far less here than it does on a bank facility.

It is repaid, refinanced or extended, and the first two need preparation well before the date. Most developers clear it from sale proceeds or refinance onto a bank facility once the project is complete and let. An extension involves a fresh assessment and it is never something to rely on.

No, though it is sometimes used as one, and that is where it goes wrong. Experienced developers use private funding deliberately, because a deadline is worth more to them than the margin between two rates. Using it to prop up a project that does not work only makes the loss bigger, and we will tell you if that is what we are looking at.