What is development finance?
Development finance provides short-term funding for property development, refurbishment and construction projects. It is designed to cover land acquisition, build costs and professional fees, with the loan typically repaid through sales or refinancing upon completion.
How is funding assessed?
Lenders assess development finance based on several key factors:
- Gross Development Value (GDV) — the projected value of the completed scheme
- Build costs — construction and professional fees
- Developer track record — experience and past project performance
- Loan-to-Cost (LTC) — typically up to 70-80% of total project costs
- Loan-to-GDV — lenders may cap at 60-65% of GDV
Stage drawdowns
Funds are typically released in stages aligned to construction milestones — foundation, structure, weather-tight, and completion. Each drawdown requires a site inspection and sign-off.
Exit strategy
Every development finance facility requires a credible exit strategy, typically through:
- Sale of completed units
- Refinancing to a term loan or commercial mortgage
- Retained units generating rental income
Explore our development finance services or speak to a specialist.