Development finance is a funding solution designed to support ground-up construction projects, such as building new houses or flats on a plot of land. It covers a portion of the land acquisition plus 100% of build costs, professional fees and interest, wrapped into a single facility that funds the project from purchase through to completion and sale/refinance.
Unlike refurbishment finance, which focuses on improving existing buildings, development finance is generally used when a property is being built from scratch. This makes it suitable for experienced developers producing well considered and affordable builds intended for the open market - affordable, mortgageable and saleable to the mass buyer audience.
The process begins before construction starts. The borrower identifies a plot, prepares drawings and planning documentation, scopes build costs and assesses viability. Once ready, they approach the lender to confirm the funding structure.
The lender reviews:
Planning permission & site plans
Build cost breakdowns and estimated GDV
Professional team experience (architect, contractor, engineer)
Section 106/CIL obligations
Warranty provider (required for saleability)
If the numbers stack up, indicative heads of terms are issued. The facility is structured to fund 100% of the build and associated fees, with the remainder of loan allocation applied toward land purchase.
Once underway:
Valuation instructed
Project monitoring surveyor appointed
Build costs released in stages as work progresses
Ongoing site inspections maintain cost control and programme alignment
Because projects run longer than a typical refurb (usually 12–24 months), funds are drawn down gradually through build phases rather than all at once.
A development facility is structured to fund the entire construction phase, including:
A contribution toward land purchase
100% of build costs
Professional fees (architect, structural engineer, planning consultants etc.)
Interest rolled up over the term
Monitoring surveyor & valuation costs
Typical lending parameters:
Up to 65% Loan-to-GDV
Up to 85% loan-to-cost overall
Deposit normally 30–35% of land purchase price
This ensures the project remains viable, with a clear exit through sale or long-term refinance once complete.
A borrower secures land suitable for a four-unit residential scheme. Planning is already approved. Total build cost projections and professional fees are submitted alongside drawings and team credentials.
Before funding is issued, the borrower:
Provides planning permission documents
Shares detailed cost appraisal & schedule of works
Confirms main contractor and supply chain
Evidences experience through a developer CV
The lender issues heads of terms subject to valuation. A monitoring surveyor is appointed to oversee progress, attend regular site visits and approve staged drawdowns.
As the build develops:
Funds are released in tranches as works are certified
Costs remain under scrutiny to maintain contingency
The borrower exits via sale or refinance onto a term product
Traditional mortgages rarely support new build construction because they require a finished, mortgageable asset. Development finance offers:
Upfront capital to acquire land
Full funding for construction
Structured drawdowns tied to progress
Professional oversight and risk management
Without it, most ground-up projects could not be delivered.
Full project funding
Covers construction, fees and interest - reducing upfront capital requirement.Controlled staging & oversight
Monitoring surveyors ensure works stay on programme and budget.Enables ground-up value creation
Transforms land into completed, saleable units.
This product is best suited to:
Experienced developers
Contractors with a proven track record
Portfolio investors expanding into new build schemes
Builders with planning-ready sites
It is not typically suited to first-time developers without experience, as lenders require demonstrable build history, cost control and team capability.
Yes - a calculator can estimate:
Maximum borrowing based on GDV
Build cost funding eligibility
Required deposit
Interest and rolled-up costs
It won’t replace underwriting, but it helps test project viability quickly.
