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Don’t invest unless you’re prepared to lose money. This is a high risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong. Take 2 mins to learn more.

What are Property Development Loans (PDLs).

Find out more about Property Development Loans.

What determines when a PDL starts earning interest?

This article is part of a series on PDLs and it takes a look at when investors start to earn interest once they have lent money to a property developer.

The commencement of a loan is the point at which the funds are released to the borrower. It marks the start of the term of the loan and therefore the point at which interest starts to be accrued.  

The PDLs that Crowdstacker features aim for loan commencement to be roughly four to six weeks after the loan itself has been fully funded. But this is not always the case. Sometimes it is earlier, and at other times it is later.

But what causes this? And why is it not possible to be more precise about the exact date a loan will commence?

What happens in the run up to commencement?

Even the smallest property development projects can be complex with many parties involved. This could include vendors of the land or property - if a property is being bought as part of the development.

There are always suppliers and contractors to bring on board and/or work with, from construction companies to quantity surveyors, and architects to the Local Council.

Plus, of course, there are lawyers who will represent the interests of the senior lender, the developer, other investors, contractors, and of course Crowdstacker's own legal team.

Agreements need to be formulated and finalised, and paperwork needs to be circulated and signed. Often, even though the project is already underway or deemed to be 'about the start', the process of aligning all the interests of these parties can take time.

When does commencement actually occur?

Commencement can only occur when every last loose end has been tied up, every question answered, every document signed and every agreement finalised. Choreographing all of this so it follows in perfect sequence is difficult and can take time.  

Thankfully most often does projects get going without a problem. And then exciting property investment journey begins!

You can find out more about our current PDLs and the rest of the series on PDLs below:

Our latest listed PDLs

What is a Property Development Loan?

What type of finance is a PDL?

The key differences between a PDL Loan and a traditional P2P business loan

The different types of PDLs

Why do PDLs offer higher interest rates?

Why don't senior lenders offer mezzanine finance?

Why do property developers need mezzanine finance?

How are PDLs assessed?

What determines when a PDL starts earning interest?



Wednesday, January 25, 2023