Development finance
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Bridging and development finance experts
BTL and commercial mortgages
30 years' experience in banking and finance
Access to 150+ lenders
How does development finance work?
Ground-up, newbuild or heavy refurb projects
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Development finance is for property developers requiring funds to either build from the ground up on land with planning permission, or for major conversion or renovation projects.
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Development finance usually comes with a maximum term of 24 months.
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Lending usually capped at 65% of the project GDV.
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In many cases, lenders will provide 100% of the development costs.
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A development facility is usually drawn in tranches, so you can borrow as you need funds during the build process.
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Interest is usually rolled up into the loan, which is usually redeemed when the project is complete and either sold or refinanced into a longer-term finance product.
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Developer exit loans are also available. These enable you to pull out equity from a completed or near-completed project, so that you can move onto the next one.
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Development experience is preferred by lenders, but first-time developers also have options available.
Featured case study: Property developer
A property developer based in Staffordshire approached us after finalising negotiations on purchasing a hotel with planning permission to extend the hotel by adding 14 new apartments to the existing building. The client needed £900k on day 1 to purchase the property with a further £1.5m to develop the new apartments, which he later plans to operate at holiday rentals. After discussing the deal with selected development lenders on our panel that we knew would have an appetite and be able to offer 100% of the development costs on a LTGDV up to 48%, we were able to produce terms to the client the very next day.
After completing valuations, legal’s and other necessary checks the client received the funds within 4 weeks and was able to make the purchase and begin constructing the apartments over a 12-month term. The development loan will be taken out with a longer-term solution such as a commercial mortgage once the building works have been finished.
