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Development finance rates from 0.83%

Using property development finance to fund a project offers several clear advantages. Even if you have enough cash on hand, it's still worth considering a development loan for part of the project.

The benefits of development finance include:

  • It allows you to take on larger projects compared to smaller, self-funded ones.
  • It helps maintain cash flow until the project is completed, as you may not need to use all your available funds.
  • It eliminates the need to wait for one property to sell before starting or completing another, preventing missed opportunities.
  • There are no monthly payments during the loan term, so you can focus fully on completing the project.
Development Loan Example

To understand how a development loan can help you achieve higher profits, 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:

Upon Sale

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 funds projects like housing, infrastructure, and commercial developments that boost economic growth. In the UK, it involves a mix of public and private funding, detailed planning, and ongoing evaluation.

  • Project Identification: Choose a project that aligns with local authority or investor goals, such as housing, transport, or urban regeneration.
  • Feasibility Study: A report that assesses the project’s financial viability, risks, and benefits.
  • Funding Options: Once the project is feasible, developers explore public (e.g., government grants) or private (e.g., bank loans) funding sources.
  • Planning and Approval: Obtain necessary permits to ensure the project meets regulations.
  • Financing: After planning approval, apply for financing. A lender values the project and makes an offer. Once funded, the project begins.
  • Development: Construction starts, monitored for quality and budget management.
  • Monitoring: Regular reviews track progress and make adjustments as needed.
  • Repayment: Private projects repay loans when they generate revenue; public projects focus on long-term benefits.
  • Completion: The project becomes operational (e.g., homes sold, transport system running).
  • Post-Implementation Review: A final review assesses the project’s long-term success.

What is the development finance application process?

  • Enquiry: Contact a lender once you have land and planning permission. Call us at 0116 464 5514.
  • Indicative Terms: After discussing the project, you’ll receive a summary of possible loan terms.
  • Agreement in Principle: The lender offers terms, including fees and conditions (subject to approval).
  • Site Visit: The lender may visit the site and meet your team.
  • Valuation: A surveyor assesses the property and project viability.
  • Offer: The loan is finalised, and a solicitor works out the legal terms.
  • Completion: Funds are released, and construction begins.

What are the application requirements?

  • Property value or purchase price.
  • Schedule of works.
  • Contingency plans.
  • Expected final value (GDV).
  • Developers experience.
  • List of professionals (eg contractors).
  • Planning permissions and building regulations.

What costs are involved?

  • Set-up Fees: Around 2% of the loan amount
  • Exit Fees: Around 1% of the loan amount
  • Interest: Charged monthly, starting at 0.83%
  • Professional Fees: For architects, builders, solicitors, etc.

What about planning permissions and regulations?

Planning permission is needed for most projects. Types include:

  • Outline Planning: Development without detailed plans.
  • Reserved Matters: Final details after outline approval.
  • Full Planning: Detailed application with full plans.
  • Section 106: Agreements covering specific planning needs.

How much can I borrow?

Loan amounts depend on the project. For residential properties, you can typically borrow up to 65% of the property’s purchase price and up to 100% of build costs, paid in stages.

Is a deposit required?

Yes, lenders require the borrower to contribute their own funds to the project.

Do I need a solicitor?

Yes, a solicitor is required for the legal aspects.

Is there anything else to be aware of?

  • Building Regulations: These must be followed, and the builder or owner is responsible.
  • NHBC: Provides insurance and warranties for new homes.
  • Fixed Price Contract: Protects against unexpected construction costs.
  • Alternative Financing: Options like second-charge mortgages, bridging loans, or crowdfunding may also be available.

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