Development Finance

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What is Development Finance?

Property development finance is a type of funding used to finance the construction, conversion or heavy refurbishment of buildings. The loan is usually set up as a short-term loan to fund the project only during the build. Once the project has been built out, the loan is usually repaid through the sale of the property, or refinance.

View Our Latest Products

View some of the latest and cheapest property development finance products in the market.

Product DF0001 - Apply Now
Interest Rate
Arrangement Fee
Min-Max Loan
£3,000,000 - £25,000,000
Max Term
30 Months
Experience Required
Exit Fee On Negotiation
Product DF0002 - Apply Now
Interest Rate
Arrangement Fee
Min-Max Loan
£2,500,000 - £100,000,000
Max Term
36 Months
Experience Required
No Exit Fee
Product DF0003 - Apply Now
Interest Rate
Arrangement Fee
Min-Max Loan
£500,000 - £20,000,000
Max Term
18 Months
Experience Required
Exit Fee 1% of GDV

Everything You Need To Know About Property Development Finance

From guides to criteria, faqs and jargon busters, at ABC Finance we have everything you need to know about funding property developments.

Working with ABC Finance Ltd.

Our team of experts are on hand to secure you the best property development loans possible. We have contacts with lenders across the market to ensure we can always offer the best terms for your project. We work with you to ensure your application runs smoothly throughout the process. We are always on hand to support you, even after your loan has completed.


Will I Qualify?

There are hundreds of different property development loans out there and they cover almost all the property development arena.

There are specialist development funding lenders in the market who are willing to lend to inexperienced developers, people without a deposit and on difficult sites. Whatever your circumstances, we will usually have a lender for you.

The key factors in the success of a property development loan application is that the site is profitable, the build is realistic and that there is demand for the finished product.

Of course, if you aren’t looking to take on joint-venture finance, the ability to fund the deposit will also be a major factor in the lending decision.

What are the Benefits of Property Development Finance?

Take on Larger Projects

Taking out a property development loan allows you to fund much bigger projects than your budget would usually allow. This can facilitate some excellent, high-profit schemes to you that would usually be out of reach.

Where time and the team around you dictate, it may even allow you to take on multiple projects at the same time, potentially enjoying economies of scale. This can increase your profits significantly.

Release Your Funds and Use Them Elsewhere

By taking out property a property development loan, you can put far less money into a project. It’s not uncommon to only put in 10% of the cost of the project, borrowing 90% loan to cost. This means your savings don’t have to all be put into the project. This has two benefits:

  1. You can use those funds elsewhere as other opportunities arise.
  2. You are far less committed to the project financially. Generally, it’s never considered to be a good thing when all your eggs are in one basket, so diversification is key. Protect your savings by financing your developments.

Increase Your Return on Investment

Property development increases your return on investment. By putting far less money into the project and only reducing the profit a small amount, you will be getting a far greater return per £ invested.

Leveraging business transactions has long been used to get the best possible return on investment and it’s no different with property development. You can make your money work much harder for you by taking out property property development funding.


A client is buying a site for £1,000,000 and is looking to build out into 12×3 bedroom homes.

The build would cost £1,800,000 and it is expected to sell for £4,600,000. The client is an experienced developer with a strong net worth. They plan to sell the finished houses on the open market.

Purchase Price£1,000,000
Build Costs£1,800,000
Gross Development Value£4,600,000

The client needs to borrow both to fund the purchase, and would like to finance the full build costs, if possible. We can lend 70% of the purchase of the site and 100% of the build costs with our chosen lender, if the total borrowing is less than 90% of the total cost of the project.

Day 1 Value£1,000,000
70% of Day 1 Value£700,000
Build Costs£1,800,000
Total Loan£2,500,000

By lending 70% of the purchase price and 100% of the build costs, the client can borrow £2,500,000. This figure is just under 90% of the total project costs.

Total Project Cost£2,800,000
90% Of Total Project Cost£2,520,000
Maximum Loan£2,500,000

The £700,000 required to complete the purchase would be released upfront, with the remaining funds released over the term of the loan.

The final step is to ensure the funds borrowed fit the lender’s loan to gross development value (GDV) calculation. In this example, the client can borrow up to 75% of the gross development value.

Gross Development Value£4,600,000
Loan Amount£2,500,000
Loan to GDV54.3%

In this situation, the loan would fit the lender’s criteria and we would be able to move forward with the application.

Things to Consider

It Costs Money

Although property development loans increase your return on investment, they also cost money. This will reduce the overall profit of your scheme as the finance will be an added expense. This can of course be offset by taking on larger, or multiple projects, but on a project by project basis, financed developments will make slightly less money.

Your Lender Will Want to Visit the Site

The lender will want to visit the site throughout the build before releasing each stage payment to you. Whether it is a representative of the lender, or a quantity surveyor, you will have to set aside time each time you want to draw down money to show somebody your work. Although it doesn’t take up too much time, it is another commitment at a very busy time and must be considered.

You Will Have to Provide All of the Required Information Needed to Apply

The documents needed to submit your application can be time consuming to produce. The lender will want to see the planning permission details, drawings, costings, details of your track record and will need an application form to be completed.

How Do Property Development Loans Differ from a Bridging Loan?

There is a big crossover between property development loans and bridging loans, especially when looking at funding a site through planning before building it out or refurbishing a property.

The key factor is how heavy the work involved is going to be. If there is a significant extension (say 30% of the floor space or more) then you are likely to need a property development loan. Ground up development will always require property a bespoke property development product, and conversions with no extension may qualify for either product.

What We’re Proud Of

  • We are FCA regulated & Members of the AOBP
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  • ABC Finance Ltd was established in 2000
  • We search the whole market to secure our clients the best terms
  • We offer rates from 4.5% per annum
  • We never charge upfront fees
  • Talk to an advisor or choose your own product and apply online
  • We fund schemes across the whole of England, Wales, Scotland & Northern Ireland

When Should I Apply?

Property development finance is usually only usually available for sites with full planning permission. If you want to borrow before you have planning, you should consider planning gain finance.

You should submit your application early to allow for any delays. Property development is complex, and delays can occur where new information comes to light. Our advisers can arrange your application while you wait for planning permission.

How Long Does It Take?

Completion of your application is usually achieved in around 6 weeks. If you need the application to be wrapped up particularly quickly, inform your adviser upfront. If your deadline is particularly tight, we will mark your application as urgent to ensure you can draw down your funds in time.


About The Author

This content was produced by our Commercial Lending Director, Gary Hemming. Gary has over 15 years’ experience in financial services and specialises in bridging loans, commercial mortgages, development finance and business loans. He is widely respected in his field and regularly provides expert commentary for specialist trade publications, specialist business press as well as local and national press.

Gary Hemming CeMAP CeFA CeRGI CSP  -  
Commercial Lending Director