Development Finance
Use it to buy, refurbish or build.
Ready to go?
Apply in 3 minutes. One of our Development Finance Specialists will then guide you through your options.
Development Finance
Use it to buy, refurbish or build.
Ready to go?
Apply in 3 minutes. One of our Development Finance Specialists will then guide you through your options.
Loan Amount
£100k-£10,000,000
Loan Term
Up to 18 months
Time to Funds
As Little as 30 Days
Funding Level
Up to 70% LTV
Funding to get your development project underway
Getting the right funding lines in place from the start is key to the success of any building project. Fortunately the developement finance market is very active, with appetite from high street banks as well as specialist property finance lenders.
Development Finance: What You Need to Know
Development finance is used to fund the build costs of a new project or to fund a combination of both the land purchase and build costs.
Property development requires meticulous planning from sourcing the right site through to carefully selecting your project management team and contractor. With this in mind, securing the most suitable borrowing option that works best for you and your business is just as crucial and should be given just as much consideration.
How does Development Finance work?
Development Finance is a specialist product designed specifically to fund development projects. A valuation will need to be undertaken and the valuer will comment on the initial value of the site (Day 1 value), the realism of the build costs, and the expected end value (the Gross Development Value, or GDV for short).
The lender will typically then lend a percentage against the Day 1 value, a percentage of build cost, and the total borrowing will need to be below a set percentage of the Gross Development Value.
A development loan normally has a term of 3 – 24 months and is repaid through sale proceeds or by refinancing the borrowing onto a long term loan. Interest is normally “rolled-up” and incorporated into the loan amount so that no repayments are required while the loan is outstanding.
How much can I borrow?
The majority of lenders will require the applicant to demonstrate a track record of developing property successfully. You can secure finance for both the land purchase and the development works by borrowing against the equity in the site as well as the anticipated value of the completed development. Specialist providers can issue terms up to:
• 70% LTV (against Day 1 value/purchase price)
• 100% build costs if required
• 70% LTGDV (Loan to Gross Development Value)
High street banks, however, would typically offer no more than 50%. Stronger candidates are those who can demonstrate experience at developing similar schemes. Where experience is weaker then more conservative terms are to be expected.
Types of Development Finance
Development finance takes on various shapes and sizes. Typically we’d categorize it as follows:
1. Refurbishment – developing an existing building. Suitable for residential conversions or commercial to residential projects.
2. Finish & exit – funding part-complete developments. This product would fund the development to practical completion and then allow time to sell or refinance.
3. Development exit – where the project has got to practical completion but some time is needed to sell the property.
4. Ground-up development – where land is purchased and the plan is to build from foundations upwards.
Recently completed Development Finance
- £255,000
- Conversion to residential
- 4% variable
- 45% Loan to value
- £600,000
- Finish & exit
- 0.66% p.m.
- 56% Loan to value
Ready to find your Development Finance?
Talk to one of our Development Finance Specialists. We’re on hand to take you through the options available.
