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Development finance rates from 0.83%

There are many obvious advantages when it comes to utilising property development finance to fund a project. Even if you have the amount of cash needed already available, it is worth looking at the benefits of a development loan for at least part of the project.

The pros of development finance include:

  • Having access to funds for property development purposes allows borrowers to take on bigger projects than they would usually be in a position to finance.
  • It helps to maintain a healthy cash flow until the development has been sold.
  • Funding for many projects eliminates the need to wait for one to sell before beginning the next. Access to critical cash will guarantee that you do not miss out on any potential development possibilities.
  • The lower the capital invested in the project, the greater the return on investment (ROI). You must consider financial expenses, which will be deducted from earnings, but because your personal investment is lower, the return on investment will be higher.
Development Loan Example

To see how a development loan can benefit you in achieving high profit gains, please see the example scenario below*.
*This is an illustrative example only. Please contact our team to discuss your exact project quote in more detail.

Description Amount
Initial investment £125,000
Development loan £575,000
Total project build cost £700,000
Loan interest £115,000
Broker/lender fees £4,500
Solicitor fee £2,750
Completed sale price £1,325,000
Total profit on completed project sale £502,750

Types of Development Loans

When looking for property development finance it is important to identify the type of project being planned by the developer in order to access the correct funding product. Types of works can include:

ground up build development finance

Ground up builds

New builds nearly always require development finance loans. Once the project is completed, developers may use development exit finance as a more cost-effective solution, but this cannot be done before the project is watertight.

property conversion or restoration finance

Large scale restoration and property conversions

To accommodate this type of project refurbishment finance is typically the correct type of loan to use, however if the project is larger than the norm, development finance may be a better alternative.

property refurbishment finance

Property refurbishment

A refurbishment loan is a type of bridging finance generally used for property renovations. It can be used for various improvements including, installing a new roof, general structural changes, building an extension, refurbishment, and decoration.

bridging loan property development

Bridging loan for property development

Property investors or developers may want to buy property which needs development or completion work still doing and are unable to get funding from their bank. This is a typical scenario when a bridging loan is a suitable alternative.

How is Development Finance Repaid?

Development finance loans are typically paid in one of the following three ways:

Paid in full

The total loan amount is paid in full, using the profits, when the project is complete, and the properties have been sold.

refinance with long term loan

Refinancing using a long term loan

This usually happens when the developer wants to keep the development for either personal use or for rental purposes.

development exit finance

Refinancing using a Development Exit Bridging Finance

This type of short term loan is often used to fund a new development project before the current project is sold. It can also be used to give developers a bit of breathing space to complete minor works and find buyers.

Frequently Asked Questions

How does development finance work?

Development finance helps fund projects like infrastructure, housing, or commercial developments that boost economic growth and improve communities. In the UK, this involves a mix of public and private funding, careful planning, and on-going evaluation.

  • Project Identification: First, identify a project that aligns with the goals of local authorities or private investors, such as housing, transport improvements, or urban regeneration.
  • Feasibility Study: A report assesses the project’s economic viability, potential risks, and benefits. This includes financial projections and market analysis.
  • Funding Options: Once deemed viable, developers explore funding sources—either public (e.g., government grants) or private (e.g., bank loans or investors).
  • Planning and Approval: Secure necessary permits and approvals to ensure the project complies with regulations and environmental standards.
  • Financing: Once approved, the funding is finalised, which may include government grants, private loans, or a combination.
  • Development: Construction begins, monitored for quality control. Project managers oversee timelines, budgets, and communication.
  • Monitoring: Regular evaluations track progress and impact on the community, with adjustments made as needed.
  • Repayment: Private projects repay loans when revenue is generated; public projects may focus on long-term economic benefits.
  • Completion: The project becomes operational, serving its intended purpose (e.g., homes sold, transport system in use).
  • Post-Implementation Review: After completion, a review assesses long-term success.

What is the development finance application process?

  • Enquiry: Once you have land and planning permission, contact a lender to discuss financing options. Speak to our expert team to discuss your case, our contact number is 0116 464 5514.
  • Indicative Terms: After initial discussions, you’ll receive a summary of potential loan terms.
  • Agreement in Principle: The lender outlines the offer, including fees and conditions (subject to planning permissions and property value).
  • Site Visit: The lender may visit the site and meet your project team.
  • Valuation: A professional surveyor assesses the property and project viability.
  • Offer: The loan is underwritten, and a solicitor finalises the legal terms.
  • Completion: Funds are released, and the project can begin.

What are the application requirements?

  • Property value (if owned)
  • Cost breakdown of the project
  • Contingency plans
  • Development timeline
  • Expected final value
  • Developer’s experience
  • List of professionals involved
  • Planning permissions and building regulations

What costs are involved?

  • Set-up fees: usually around 1% of the loan amount.
  • Exit Fees: Around 1% of the loan amount or the final development value.
  • Interest: Charged monthly, often added to the loan.
  • Professional Fees: costs for architects, builders, solicitors, etc.
  • Contingency Costs: Usually 15%-20% of total costs for unexpected expenses.

What about planning permissions and regulations?

Planning permission is required for most projects. Types include:

  • Outline Planning: Allows development without detailed plans.
  • Reserved Matters: Fills in details after outline approval.
  • Full/Detailed Planning: Applies directly with detailed plans.
  • Section 106: Agreements addressing specific planning requirements.

How much can I borrow?

Loan amounts vary based on the project and lender.

Is a deposit required?

Yes, developers typically contribute a portion of the total costs.

Is refinancing a good idea?

It can be useful for faster loan payoffs or accessing cash in emergencies.

Do I need a solicitor?

Yes, to navigate the legal process.

Is there anything else to be aware of?

  • Building Regulations: Compliance is mandatory; the builder or owner is responsible.
  • NHBC: Provides warranties and insurance for new homes.
  • Fixed Price Contract: A set cost for construction, protecting against unexpected expenses.
  • Alternative Financing: Options like second-charge mortgages, bridging loans, or crowdfunding can also be used.

Development Finance Products

Contact Us

Contact Details

phoneTelephone: 0116 464 5514

locationWeb: www.developmentfinance.com

Opening Hours

Mon-Thurs: 9am-8.30pm

Fri: 9am-5pm

Sat: 10am-5pm

Sun: 11am-5pm


Job Vacancies

For vacancies please email us on  jobs@developmentfinance.com