Development Finance

Development Finance –Expert Mortgages for Property Developers

Property development requires specialist financing. Whether you’re a residential developer building new homes, a property investor buying rundown properties to develop, or a builder financing multiple concurrent projects, development finance works differently from standard mortgages.

What is Development Finance?

Development finance is lending specifically structured for property development projects. It funds land acquisition, renovation, construction and holding costs during development phases.

Key characteristics: rapid assessment, flexibility on property condition, staged funding releases, assessment based on development value rather than current property value, and shorter terms than mortgages.

Types of Development Finance

Development Mortgages

Traditional development mortgages structured around development timeline. The lender advances funds in stages as development progresses – purchase, planning confirmation, construction start, completion.

Development Bridging

Short-term bridging finance for rapid acquisition or development gaps. Used when traditional development mortgages are too slow or development timeline is uncertain.

Renovation Finance

Specifically for properties requiring major renovation or refurbishment. The lender assesses the property’s value after renovation rather than current value.

Development Scenarios

House Building and Construction

You’re building multiple houses on land or through permissions. Development finance funds land acquisition, construction costs and holding costs. Funded in stages as construction progresses.

Buy, Develop, Sell Strategy

You identify rundown properties with development potential. Development finance funds acquisition and renovation. Once complete, you sell or refinance.

Commercial Development

You’re developing commercial property – offices, retail, mixed-use developments. Development finance structures around the commercial project timeline and investment return.

The Development Finance Process

Development finance assessment is different from standard mortgages. The lender focuses on the development project and outcome, not current property condition.

Stage 1: Project Review

We understand your development project: acquisition cost, development timeline, estimated completion value, your experience. This shapes lender selection.

Stage 2: Lender Approach

We approach specialist development lenders. They assess the project – location, feasibility, market value potential, your track record.

Stage 3: Valuation and Assessment

The lender commissions a valuation or development appraisal. This assesses the property’s post-development value and project feasibility.

Stage 4: Offer and Terms

The lender issues a development finance offer outlining: loan amount, staged funding releases, interest rates, development timeline expectations, exit strategy requirements.

Stage 5: Drawdown Structure

Funds are released in stages linked to project milestones. Example: 40% on purchase, 30% on planning confirmation, 20% on construction start, 10% on completion. This reduces lender risk.

Development Finance FAQs

How is development finance different from standard mortgages?

Lenders assess development value potential, not current property condition. Assessment
focuses on project feasibility and completion value. Funds are released in stages. Terms are
shorter (3-5 years typically).

How much can I borrow for a development project?

Typically up to 60-70% of the post-development property value, depending on the lender and
project certainty. The lender wants safety margin in case values don’t materialise as expected.

Do I need planning permission before applying?

Not always. Some lenders will lend on planning potential. But having planning secured
makes the project significantly more lendable and often improves rates.

How long does development finance take to arrange?

6-12 weeks typically. Longer than standard mortgages because the lender needs to assess
the development project carefully.

What if the project takes longer than planned?

Lenders can sometimes extend development finance if the project is progressing well.
Extensions might attract additional fees. Plan conservatively for timescale.

Can I get development finance if I'm a first-time developer?

Possible, but harder. Many lenders prefer experienced developers. If you’re new, having a
strong project, experienced team, or professional advisers helps.

What's the exit strategy for development finance?

You sell the completed property, refinance into a standard mortgage, or hold as a long-term
investment. The exit determines your financing success.

Why Choose a Development Finance Specialist

Development finance is specialist territory. Most general brokers don’t understand development projects or have lender relationships for development deals. Specialist brokers understand project assessment, development risk and which lenders are active.

DEVELOPMENT FINANCE