DEVELOPMENT

Development Finance

Senior development loans are designed to give property developers and house-builders access to a greater leverage of funding.

Up to 95% LTC

Up to 90% of the total acquisition and build costs.

Up to 75% LTGDV

Typically, a maximum of 75% loan to gross development value can be achieved.

5.5%-7.5% Interest

Annual interest on monies borrowed is from 5.5% plus the base rate.

In contrast to traditional high street banks, senior development finance is a common type of loan for real estate development that offers higher leverage funding and more cost-effective and flexible financing options.

The lender assumes a first charge over the asset being developed and is authorised to provide funding for up to 90% of the project expenditures, including interest, or 75% of the Gross Development Value.

Whilst a good level of direct development experience can give access to a wider range of lenders, there are lenders who can consider first time developers.

Most lenders prefer residential buildings, however there are also alternatives for commercial, mixed-use, student housing, leisure, care home, and industrial ventures.

Although interest rates begin at 5.5%, please be aware that as leverage increases there is increased risk for the lender, so expect higher interest rates.

Key Features

A simple method of accessing funds to commence, continue or complete a property development project.

Loan sizes from £1M up to £150M.

All of the United Kingdom considered.

Terms from 12 - 36 months.

All types of residential and mixed used schemes.

Experienced developers with a history of developing projects of a similar size.

20% personal guarantee, company debenture and legal charge over the subject property.

Stretched and peak borrowing facilities available.

FAQS

Questions We Get Asked

Please get in touch with your advisor if you have any more queries.

How do I know I'm getting the best terms?

As an independent advisor, we offer specialist solutions from our extensive panel of lenders.

Before we procure terms for your project, we underwrite in house prior to presenting the scheme. This means that we know which lenders will be the most suitable for you as a developer and, ultimately, the scheme that you are building.

Why wouldn’t a developer procure senior development finance from a bank?

This type of funding was discontinued by traditional high-street lenders previously, making it more popular with challenger banks and alternative lenders.

How is the loan capital received?

Normally lenders will offer a day one amount or land loan, the remainder is drawn down over the construction lifecycle in stages as the project progresses.

How much can I borrow?

This type of funding is bespoke. Lenders will assess the risk, leverage and interest rate.

They will be dependent on many factors such as the project, location, build type, valuation, construction costs and developer history.

Do I have to service the interest?

In most cases, the interest and financing fees are rolled up into the loan and paid with the original capital at the end of the loan term.

Do I have to service the interest?

Lenders will typically require a personal guarantee in the amount of 20% of the gross loan value, as well as a legal charge over the subject property and a debenture on the borrowing SPV (special purpose vehicle).