Development Finance Guides & Resources Hub
Development finance is a specialist product designed for one thing: funding the construction or conversion of property from start to completion. Unlike a bridging loan, which releases funds in full upfront, development finance is drawn down in stages as work progresses — reducing your interest costs and giving lenders comfort that funds are being deployed correctly.
This hub brings together all our development finance resources. Whether you're a first-time developer trying to understand how the product works, or an experienced developer researching rates and structures, use the links below to navigate to the topic you need.
Start Here
What Is Development Finance? UK Developer Guide
The complete introduction to development finance: how it differs from bridging, what it funds, who uses it, and the key metrics that determine how much you can borrow. Start here if you're new to development lending.
How Development Finance Works: Drawdowns, QS & Interest
The mechanics of a development loan in practice: how the drawdown process works, what the Quantity Surveyor monitors, how interest is charged on drawn funds, and what happens at practical completion.
Key Metrics & Ratios
LTV vs LTC Explained: Key Ratios for Property Finance
Two ratios every developer needs to understand: Loan to Value (LTV) and Loan to Cost (LTC). Explains how lenders calculate these, what typical limits look like, and how GDV fits into the picture.
GDV — Gross Development Value
The estimated market value of a completed development — the key benchmark lenders use to size development finance. Plain-English definition with worked examples.
Development Finance Costs
Development finance is priced differently from standard bridging. Key cost components:
- Interest rate: typically 0.75%–1.1% per month on drawn funds (charged on the outstanding balance, not the total facility)
- Arrangement fee: 1.5%–2.5% of the facility
- Exit fee: 1%–2% of the facility on some lenders
- Monitoring (QS) fee: £1,500–£5,000+ depending on the project size — covers the Quantity Surveyor's ongoing inspections
- Legal costs: yours and the lender's, typically £3,000–£8,000 for a standard development
- Valuation / development appraisal: £1,500–£5,000 depending on project complexity
The key difference from bridging: interest is charged only on drawn funds, not the full facility. A £1m facility with £500k drawn will only accrue interest on the £500k.
How Much Can You Borrow?
Development lenders assess maximum loan size using two ratios:
LTC (Loan to Cost): the loan as a percentage of total project cost (land + construction + fees). Typical maximum: 70–75% LTC.
LTGDV (Loan to Gross Development Value): the loan as a percentage of the completed development's market value. Typical maximum: 60–65% LTGDV.
The lower of these two calculations determines the maximum loan. For example:
- Total project cost: £800,000
- GDV (projected completed value): £1,200,000
- 75% LTC = £600,000 maximum
- 65% LTGDV = £780,000 maximum
- Maximum loan = £600,000 (LTC is the binding constraint)
Experienced developers with a strong track record may access higher LTCs through senior + mezzanine structures, or lenders who offer up to 100% of construction costs where the land is owned outright.
Exit Routes from Development Finance
Every development loan needs an exit — typically one of:
- Sale of the completed units — proceeds repay the lender. The most common exit for residential schemes.
- Refinance onto investment mortgages — if you're retaining units as a rental portfolio, you refinance each unit or the portfolio onto buy-to-let mortgages.
- Development exit finance — a transitional bridge that repays the development loan while you sell, giving more time without development loan rates. Available from ~70% of GDV for near-complete schemes.
- Commercial mortgage — for mixed-use or commercial schemes retained as investments.
For developments that use bridging finance as part of the stack, see the Bridging Refinance Hub for exit strategy resources.
Working With Us on Development Finance
Development finance deals are more complex than standard bridges — they involve multiple drawdowns, QS oversight, planning conditions, and often longer timelines. A specialist broker adds significant value:
- Market access: 50+ active development lenders, from challenger banks to specialist funds
- Deal structuring: optimising the LTC/LTGDV split, senior vs mezzanine, and drawdown schedule
- Speed: experienced development lenders move faster when introduced by a broker they know
- Ongoing support: managing drawdown requests, QS liaison, and exit planning throughout the build
Get in touch to discuss your development project. We'll give you an honest view of fundability, likely terms, and the best lender options for your scheme.