Building Your Vision Starts Here: Essential Guide to Development Finance
Bringing a development project to life is a complex journey, but we’re here to structure the right funding so you can focus on the build.
Structuring Success for Your Development Project
Realising a property development dream—whether it is a heavy refurbishment, a commercial conversion, or a ground-up new build—requires more than just bricks and mortar; it requires a financial foundation that is as robust as the building itself.
As experienced property professionals who understand the pressures of a construction site, we know that development finance is fundamentally different from standard property lending. It is not a static loan, but a dynamic facility that needs to flow in sync with your build programme.
The mechanics of development finance are specific and require a deep understanding of Gross Development Value (GDV) and construction costs. Unlike a standard mortgage based on current value, development lending is based on what the site will be worth once completed.
We specialise in structuring these deals to ensure they are practical for the developer. This involves arranging a facility where funds are released in stages (drawdowns) as the build progresses, ensuring your cash flow remains healthy throughout the project timeline.
Because of the risks involved in construction, the cost structure of development finance is unique. Interest rates reflect the short-term, high-risk nature of the work, but crucial features like “rolled-up interest” can be utilised to aid your cash flow. This means that instead of servicing monthly payments while the site is non-income generating, the interest is paid as a lump sum upon completion.
We provide total transparency on these costs, including arrangement fees and professional fees, so there are no surprises in your bottom line.
Finally, we work with you to solidify your “exit strategy”—whether that is selling the units on the open market or refinancing onto a specialist buy-to-let mortgage to retain the site for long-term income. We ensure this exit is viable from day one, giving lenders the confidence to back your project.
