Mortgage and project finance
Staged funding for building work — new build, conversion and major refurbishment — released against a programme as the scheme progresses, with an exit onto a sale or a term mortgage at the end.
Start the fact find- Typical amount
- £150,000 to £25m+
- Typical term
- 9 to 30 months
- Loan to cost
- Often up to 70–80%
- Loan to GDV
- Usually capped near 65%
Indicative market ranges at the time of writing, not offers or quotes. What is available to you depends on the lender, your circumstances and the security available.
How development funding actually works
Project finance is not a mortgage paid out in one go. The land element is advanced at completion, and the build cost is released in stages as work is done — usually monthly, against a valuer's inspection confirming what has actually been built. You draw what you have spent, not what you plan to spend.
That structure exists because a half-finished building is poor security. By releasing money against verified progress, the lender keeps the debt roughly in line with the value on the ground. It also means you fund each stage before you are reimbursed, so your own working capital has to absorb the lag.
Facilities are sized against two ceilings at once. Loan to cost is the proportion of total project cost the lender will fund — often 70% to 80%. Loan to gross development value caps the debt against the finished scheme's worth, commonly around 65%. Whichever bites first sets your facility, and it is usually the GDV cap on ambitious schemes.
Interest is normally rolled up rather than paid monthly, because a site under construction generates no income. It is added to the balance and settled on exit, which keeps cash flow workable but means the debt grows throughout the build — and grows faster if the programme overruns.
What we arrange funding for
From a single conversion to a multi-unit scheme. The structure scales; what changes is the lender and the depth of due diligence.
Ground-up new build
Residential or commercial schemes on cleared or acquired land, funded from site purchase through to practical completion and exit.
Conversion and change of use
Offices to residential, barns to dwellings, houses to flats. Permitted development rights make many of these quicker to fund than a full planning application would be.
Heavy refurbishment
Structural work, extensions and full reconfiguration — schemes where the property is unmortgageable during the works and no term lender will touch it.
Light refurbishment
Cosmetic upgrades to bring a property to a lettable or saleable standard. Simpler, faster and cheaper than a full development facility.
Development exit
Refinancing a completed scheme onto cheaper terms while units sell, rather than accepting a discount to meet an expiring facility.
Part-built schemes
Taking on a site where work has stopped, or where a previous facility has run out. Harder and more expensive, but regularly funded by specialists.
How a scheme gets funded
- 1
You complete the fact find with the appraisal, and we tell you honestly whether the numbers support it.
- 2
We approach development lenders whose appetite fits the scheme size, location and your experience.
- 3
Terms are issued; a valuer and usually a monitoring surveyor review the site, costs and programme.
- 4
Funds draw down in stages against inspections through the build, then the facility is repaid on exit.
Ready to put the case together?
The fact find walks through experience, site, planning, the scheme and the full appraisal — the five things every development lender assesses.
What a development lender assesses
Development lending is the most heavily scrutinised funding in the property market, and reasonably so — the lender is betting on a building that does not exist yet. These are the areas every credit paper covers.
- Your track record: schemes completed, their scale, and your role in them. First-time developers are funded, but on tighter terms and with a stronger team required around them.
- Planning status. Full consent transforms what is available; a site without it is valued as land and funded far more conservatively.
- Whether pre-commencement conditions have been discharged, since outstanding ones can block a drawdown.
- The build cost basis. A priced tender or a QS cost plan carries far more weight than a per-square-foot estimate.
- A contingency of 5% to 10% of build cost. A scheme presented without one reads as under-planned.
- The professional team: contractor, architect, QS and project manager, with evidence they have delivered comparable work.
- The exit, in detail — sales evidence and comparables, or a term lender prepared to refinance.
- Site constraints declared up front: contamination, flood risk, protected trees, listed status, services.
What it costs
Development finance carries more cost lines than any other property funding. Judge a facility on total finance cost across the programme, not on the rate.
Interest
Charged monthly on the drawn balance and usually rolled up to the exit. Because it compounds on a growing balance, an overrun costs far more than the extra months alone suggest.
Arrangement fee
A percentage of the facility, charged at the outset and typically added to the loan rather than paid in cash.
Exit fee
Charged on redemption, sometimes as a percentage of the facility and sometimes of the gross development value. The second is materially more expensive — check which applies.
Monitoring surveyor
The lender appoints a surveyor to verify progress before each drawdown, and you pay for every visit across the whole programme.
Valuation and legal costs
Development valuations are detailed and expensive, and you pay both your own solicitor and the lender's.
Extension fees
If the programme overruns beyond the facility term, extending is charged for and priced at the lender's discretion. This is the single most common unbudgeted cost on a scheme.
Development vocabulary
Appraisals are impossible to compare until these terms are clear.
- GDV — gross development value
- What the finished scheme is expected to be worth in total. Nearly every lender metric is expressed against it, so an optimistic GDV distorts the whole appraisal.
- Loan to cost (LTC)
- The facility as a percentage of total project cost, commonly 70% to 80%. It determines how much of your own money has to go in.
- Loan to GDV
- The facility as a percentage of the finished value, usually capped near 65%. On ambitious schemes this is the ceiling that binds first.
- Day-one advance
- The amount released at completion, typically to buy the site or repay existing borrowing against it. The rest is drawn in stages.
- Drawdown and monitoring
- Staged release of build funds against a surveyor's inspection confirming work completed. You spend first and are reimbursed after.
- Practical completion
- The point the building is finished and usable. It starts the clock on your exit period — and on any extension costs if sales are slow.
How these facilities are regulated
Development and project finance for commercial purposes generally sits outside the Financial Conduct Authority's regulated regime, and the consumer protections attached to residential mortgages do not apply in the same way.
Where a scheme involves a property that you or an immediate family member will occupy on completion, the position can change and the funding may be a regulated mortgage contract. Self-build for your own home is the common example, and it is handled under a different set of rules from a scheme built to sell.
We confirm in writing which regime applies to your scheme before you commit, along with how we are paid on the case.
Frequently asked
Can a first-time developer get funding?
Yes, though on tighter terms. Expect a lower loan to cost, more equity required and closer scrutiny of your team. An experienced main contractor and an appointed project manager do a great deal to offset a thin personal track record.
Can I borrow without planning permission?
You can fund the land, but at a much lower level — a site without consent is valued as land, not as a scheme. Some lenders will structure a facility that increases on consent being granted, which is often the sensible route.
How much of my own money do I need?
Commonly 20% to 30% of total project cost, and lenders expect it to go in first or alongside rather than being drawn out at the end. Land already owned with equity in it can count toward that contribution.
What happens if the build overruns?
Interest keeps accruing and the facility may need extending, which is charged for. This is why the contingency and a realistic programme matter so much. Tell us early if it is slipping — options narrow considerably as the term end approaches.
Can I fund the site purchase and the build together?
Yes, that is the standard structure. The site element is advanced at completion and the build cost is released in stages afterwards, all under one facility.
What if units have not sold when the facility ends?
A development exit facility refinances the remaining debt onto cheaper terms, giving you room to sell properly rather than discounting to meet a deadline. It is worth arranging before the original facility expires, not after.
Before you borrow
- Your property and the site may be repossessed if you do not keep up repayments or the facility is not repaid on time.
- Rolled-up interest means the debt grows throughout the build. An overrun increases the balance faster than the additional months alone would suggest.
- Development appraisals depend on a forecast value that may not be achieved. A fall in the market between starting and selling directly reduces your profit and can leave the facility undercovered.
- Monitoring, valuation and legal fees are payable throughout and are not refundable if the scheme does not proceed.
- Figures on this page are indicative market ranges at the time of writing. They are not offers, and nothing here is a recommendation for your scheme.
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Tell us about the case
The fact find takes a little longer than an enquiry form, and it means an adviser can approach lenders straight away rather than coming back with questions.
