Development Finance FAQ

Development finance provides several advantages to property developers and investors:

• Access to large sums without tying up personal capital
• Staged drawdowns to support cash flow during construction
• Interest payments can be rolled up until the end of the term
• Fast approvals compared to high street lending
• Flexibility to fund a range of project types and structures

It is particularly useful for those looking to scale up their development activity or take on multiple projects at once.

Development finance is a short- to medium-term loan designed to fund the costs of a property development project. It is typically used for ground-up builds, major refurbishments, or conversions.

The loan is usually structured in two parts:

1. An initial advance to help with land or site acquisition
2. Staged drawdowns released throughout the build, based on progress

Lenders assess each stage via site inspections or reports from a monitoring surveyor. Interest is often rolled up and paid at the end, alongside full loan repayment, once the project is sold or refinanced.

Lenders assess how much they will lend based on:

• The value of the land or site (pre-development)
• The total build costs
• The Gross Development Value (GDV)
• The developer’s experience and exit strategy

Most lenders will offer up to 65 to 70% of the GDV, with 100% of build costs typically covered. Your own contribution may be required for land acquisition or fees, depending on the strength of the deal.

We can help you calculate your borrowing potential, including estimated interest, arrangement fees, and exit costs, so you know the full picture before committing.

In some cases, yes. It is possible to access 100% development finance, but only if you have additional security to offer. Most lenders will fund up to 100% of the build costs, but only up to 65 to 70% of the total Gross Development Value (GDV).

To achieve 100% funding, developers may use

• Additional property as security
• A joint venture partner or equity funder
• Deferred land payments or vendor finance structures

We can help structure deals where the developer puts in minimal capital, provided the project has strong fundamentals and a clear exit.