Residential & Mixed-Use Development Finance

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What Is Residential Development Finance?

Residential development finance is a type of funding used to finance the building or conversion of a property into residential units. It can be used to fund schemes from one unit to large projects of thousands of units.

Funding costs can vary widely between development finance lenders, meaning the cost of choosing the wrong lender can heavily affect the profitability of a scheme.

We offer funding from lenders across the entire development finance market and work on your behalf to secure the best possible terms for your project.

Find out more below or complete the form to talk to an expert.

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The Latest Residential Development Finance Products

View some of the latest residential development finance offers from major lenders.

Product DF0001 - Apply Now
Interest Rate
4.50%
Arrangement Fee
2.00%
Max LTC
70%
Max LTGDV
60%
Min-Max Loan
£3,000,000 - £25,000,000
Max Term
30 Months
Experience Required
Yes
Notes
Exit Fee On Negotiation
Product DF0002 - Apply Now
Interest Rate
5.90%
Arrangement Fee
2.00%
Max LTC
80%
Max LTGDV
60%
Min-Max Loan
£2,500,000 - £100,000,000
Max Term
36 Months
Experience Required
Yes
Notes
No Exit Fee
Product DF0003 - Apply Now
Interest Rate
7.00%
Arrangement Fee
2.00%
Max LTC
90%
Max LTGDV
60%
Min-Max Loan
£500,000 - £20,000,000
Max Term
18 Months
Experience Required
Yes
Notes
Exit Fee 1% of GDV

Criteria

Below are the main criteria points to consider when taking out residential development finance.

1Borrow up to 75% Loan to GDV (gross development value)
2Additional security considered in lieu of deposit
3Funding from £50,000 with no maximum loan size
4Rates from 4.5% per annum
5Funding available for experienced or inexperienced investors
6Funding available across the UK
7Regulated and unregulated funding available
8Terms from 1 month to 36 months
9Interest can be rolled into the loan with no monthly payments
10Adverse credit considered

Mixed-Use Properties

Mixed use properties are made up of both residential and commercial units, often heavily favouring any residential element. For example, a block of 20 apartments, with a retail unit on the ground floor.

Funding mixed use schemes is very similar to a purely residential scheme, but demand for the commercial element will be closely scrutinised. Some lenders will even insist on pre-let or pre-sale agreements on the commercial units.

This is because vacant commercial units are less liquid than residential housing stock.

How Much Can I Borrow?

We offer funding from £50,000, with no maximum loan. Development funding applications are considered on a case by case basis, based on the strength of the application, with the interest usually rolled into the loan.

As there are usually no affordability restrictions due to the rolled-up interest, the maximum loan is usually decided by the lender’s maximum loan to GDV.

How Much Will It Cost?

We offer funding for residential property developments starting from 4.5% per annum. Generally, interest rates will be lower for larger, lower risk loans.

Although the size of project can’t be controlled, interest rates can often be reduced by requesting a lower loan to GDV.

We scour the whole development finance market to secure the lowest rates for every application that we work on. As loans are often priced individually, it can be hard to predict the rate for your project. We can usually offer full, lender backed residential development finance terms within two hours of your initial enquiry.

How Quickly Can I Complete?

We can usually complete residential development finance applications in around six weeks, although this can be reduced for urgent applications.

It is advisable to apply for your funding as early as possible to allow as much time for completion as possible. Some lenders tend to work much faster than others. By working to a tighter deadline, you may find yourself unable to work with certain lenders, due to the time it takes them to complete an application.

How Is Development Finance Repaid?

The main two methods of repaying your loan are to either sell the property or to refinance them onto a buy to let mortgage before renting them out.

Where the properties are to be sold, the lender will look at sales data for similar properties in the local area to ensure that your proposed marketing period is realistic. Where properties are slow to sell and require long marketing periods, you may find that your lender will insist on a slightly longer term.

Where you plan to refinance and let the units once completed, the lender will ask for proof that this will be possible. This is generally done by supplying them with an agreement in principle for your proposed lender or proving that you will meet the criteria. In both cases, we can help to provide this information for you.

The third option for repayment of your loan is growing in popularity. Development exit finance can be used to refinance the loan onto another short-term loan at a lower rate. This has the advantage of offering you cost savings during your sales period.

By taking this route, you can take the pressure off your sales and allow yourself more time to achieve the best possible price for your finished properties.

Development exit finance is usually available from the point at which the properties are wind and watertight.

Will I Be Eligible?

We can provide development funding for new or experienced developers for a variety of circumstances.

Some applicants may not be acceptable to all lenders, but as we work with lenders across the market, we can usually find a suitable solution for most circumstances.

Who Can Take Out Residential Development Finance?

We can offer funding to the following:-

  • Individuals
  • Partnerships
  • Limited companies
  • Offshore companies
  • LLPs and other company structures
  • Overseas borrowers via a UK limited company

This list is not exhaustive and we are happy to consider any ownership structure.

about-the-author-gary-hemming

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

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