What is Development Finance?
Development Finance is a loan secured against land or property for the purpose of building or developing a site or property. This can be for several different asset classes such as residential houses or apartments, shops, offices, industrial units & hotels.

Who can apply for development finance?
• Experienced Property Developers.
• Smaller, less experienced builders/developers.
• Limited Companies. (UK and Off-shore).
• Trusts.
• Individuals.

How much money can be borrowed?
Depending on the project, the maximum Loan-to-Costs (LTC) is typically 90/95% and the maximum Laon-to-Gross Development Value (LTGDV) is typically 70/75% which means that the day one loan which is provided towards the purchase or refinance of the site can be up to 75/80% of the purchase price. This means that the build costs are funded in full by the lender making the project less risky for both funder and developer.

What do you need to apply for development finance?
A Profitable and Viable scheme
This means that the Profit on Costs (POC) will need to be in the region of 20% and planning should already be in place.
• A detailed developers Appraisal & Cashflow
This will provide any lender an overview and breakdown of the project costs and a timeline for the construction phase.
• Valid Planning Permission and if necessary, Listed Buildings Consent.
• Relevant experience and a Track Record
Which gives comfort to any potential development finance provider. (If there is very little track record/experience, there are some lenders who would still consider supporting the developer, but at a lower LTC/LTGDV and possibly with other stipulations and/or additional security).
• A cash deposit
Of at least 10% of the total project costs to inject into the purchase of the scheme. (Anything lower that this could be considered by way of the introduction of an equity partner).

Key Features of Development Finance
• No minimum or maximum loan sizes.
• Typical Term up to 36 months.
• Multi-unit and Single-unit schemes.
• Nationwide coverage.
• Rates from 5% per annum.
• Up to 75% LTGDV.
• Up to 95% LTC.
• No exit fees with certain lenders.
• 100% Build costs available in staged drawdowns.
• Can introduce additional security to negate the need for cash equity needed from the developer.