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Development Finance


What is Development Finance?

 Development finance is a type of short term loan which granted for the development or refurbishment of residential, commercial or mixed use properties. Development finance is primarily granted to experienced builders and developers who are seeking to raise capital to bring their building ideas to fruition.

Development Finance Criteria

As whole of market brokers, our partner firm work with lenders across the market to secure the most suitable terms for you. Most development finance lenders assess applications on a case by case basis, the below examples are intended only as a guide.

Loan Sizes

Our partner broker can fund property developments from £50,000, with no maximum loan size. For loans below £50,000, they may still be able to lend, however, a property refurbishment finance product may be more appropriate.


The term of your development finance can run from 1 to 36 months.

Acceptable Security

Any security considered, with or without planning permission.

Acceptable Borrowers

Our partner firm can lend to the following borrowers:

  • Private borrowers
  • Pension schemes
  • Partnerships
  • Limited companies
  • Offshore companies

Applicants must be aged 18 or above. Special purpose vehicle limited companies can borrow from start up and there is no requirement for previous trading history.


Our partner firm can lend in the following places:

  • England
  • Scotland
  • Wales
  • Northern Ireland

Credit History

Funding can be offered irrespective of credit history, the only exclusion will be if you are currently bankrupt. If your credit history is particularly adverse, or if you have had a large number of failed development projects in the past, lending may be restricted and interest rates higher.

Loan Purpose

Our partner firm can offer funds for any type of property development, including ground up development, part build schemes and conversions.

Planning Permission

Funding is available for sites with or without planning permission, if the planned works during the term of the loan are in line with local planning and building regulation laws.

Exit Strategy

Any exit strategy considered. The planned exit route must be realistic and will be assessed prior to being accepted.

The Property Development Finance Application Process

The application process for development finance is as follows:

1Before talking to anybody, you will need to work out a rough idea of costs, end value, profit margin, how long the project will take and viability.
2Your broker will give you a call to dissect your project, this will involve a lot of questions about the details of your plans and the people involved. This ensures that they have all the necessary information to best submit your application.
3Assuming your project is viable, you will then receive a quote in writing detailing the fees you will be required to pay (interest rate,broker fees, arrangement fees) and your borrowing terms.
4The application will then be completed and submitted to the lender.
5Assuming the lender is happy with your application, they will want to meet you and visit the site. Our commercial partner will arrange this site visit between you and the lending manager. This is so they are able better understand your project from a professional and personal view.
6After the site visit has been completed, your lending manager will submit a report on your project which will help the underwriting process. The underwriters are the people who will sign off the application as acceptable to the lender. Once this has been approved, the lender will issue the formal offer.
7At this stage, the lender will require a valuation report, this will be conducted by a surveyor recommended by the lender. The report is intended to be thorough and will comment on the current value of the site (pre-refurb value), predicted build costs, anticipated end value (gross development value) and your proposed exit strategy.
8If you are happy with the terms of the lenders formal offer letter, this will need to be signed and returned to the lender. It is vital that your chosen solicitor is experienced in dealing with development finance as if they are not familiar with this form of finance, it will cause a delay in the process.
9Lastly, once the loan application is complete, the funds can now be released in pre-set stages which will be subject to each stage of the project being signed off by a qualified architect or surveyor. At the end of the project, if the lender has an exit fee, this will need to be paid on a pre-agreed date.

What Loan Sizes & Terms Can I Access?

Property Development finance covers a wide range of projects. Minimum loans tend to start from around £50,000 with no real defined maximum.

The maximum term is 48 months, although the majority of lenders offer loans up to a maximum of 18-24 months. If a loan is required for more than 24 months, the lenders that you will have access to will be restricted. Generally, a longer term will come with higher interest rate charges.

What Interest Rates Can I Expect to Pay?

The interest rates varies between lenders and will largely depend on your experience, the loan size, the location of the site and the predicted end value of the project (The gross development value).

  • Smaller loans, usually below £500,000 tend to pay a higher rate due to the amount of work involved in managing a project.
  • A loan of above £500,000 to an experienced developer at a loan to GDV below 70% would most likely be charged between 4.5% and 9% per annum depending on demand and quality of the scheme.
  • For smaller or higher risk loans, a rate between 0.85% per month and 1.35% per month (10.2% to 16.2% per annum) is more realistic.

What Fees Am I Likely to Have to Pay?

The fees you can expect to pay are:

  • Arrangement Fee: The arrangement fee, often known as the facility fee, is usually charged by the lender as a set-up fee for the loan.
  • Exit Fee: This is not charged by all lenders, but the majority do. The fee is payable to the lender when repaying the loan.
  • Broker Fees: Brokers often charge fees for finding the best lender and managing your application to completion at the best possible terms. Some lenders will pay the broker a fee for successfully placing the application with them (usually 1%), while others will pay nothing.
  • Valuation Fees: As mentioned above, the lender will instruct a valuation to complete a report on the development.
  • Professional Fees: Architects, quantity surveyors and solicitors are likely to be needed and they ofcourse will require a fee. You might also need to hire project managers who will also come at a price.

The maximum loan on property development finance applications is decided using several factors. They are:

  • Loan to Cost (LTC): Loan to cost – LTC – is a metric used to compare the amount of loan offered as a percentage of the total cost of building the project.
  • Day 1 Position: Lenders will always look at the amount of money they are expected to release upfront to get the project moving and purchase the site. The maximum available is generally 65-70%, with more sometimes available if suitable additional security is offered.
  • Loan to Gross Development Value (GDV): The loan to gross development value is the maximum loan expressed as a percentage of the GDV.