Development Finance: Fund Property Development Projects with Staged Drawdowns

Development finance is designed specifically to fund construction or refurbishment costs through staged drawdowns. Bridging finance is usually simpler and is designed as short-term borrowing secured against property, typically not structured to fund staged build costs.

In general:

• Bridging finance: short-term, simpler, often faster, usually one lump sum
• Development finance: staged funding, monitoring, more diligence, designed for build projects

The best option depends on project complexity, build requirements, and lender criteria.

Borrowing amounts depend on:

• GDV (value of completed project)
• Development costs and schedule
• Your deposit and contingency
• Planning status
• Your experience and track record

Lenders often structure offers based on loan-to-GDV and loan-to-cost, and the final amount depends on lender appetite and risk assessment.

Most development finance lenders require a meaningful deposit to reduce risk and ensure the borrower has a stake in the project. Deposit levels vary, but lenders often expect the borrower to contribute:

• Part of land cost / purchase cost
• A contingency buffer
• Sometimes professional fees

We can advise on realistic deposit expectations once we understand the project and planning position.

Sometimes, yes. Particularly where the lender is comfortable with the deal and the land valuation supports it. However, many development finance deals focus mainly on build costs, with land funded via deposit or other facilities.

Some projects are funded using a structure that combines land finance and build finance into a single package, depending on lender and circumstances.

Staged drawdowns are released as the build progresses. Typically:

• An initial amount is released at completion
• Further funds are released at agreed stages
• A monitoring surveyor inspects progress and confirms work completed
• The lender releases the next drawdown based on progress and valuation

This approach ensures funding aligns with real construction progress.

Not always. Development finance can be structured as:

• rolled-up interest: interest is added to the loan and repaid at exit
• retained interest: a portion is held back and settled at exit
• serviced interest: interest is paid monthly

The best structure depends on cashflow, the project timeline, and lender criteria. Many developers prefer rolled-up interest to protect cashflow during build.

Development finance usually takes longer than standard borrowing because it involves valuation, monitoring setup, due diligence and legal work. Timescales depend on:

• How quickly documents are supplied
• Complexity of the deal
• Planning position
• Lender underwriting requirements
• Legal progress

If you have a deadline, we can help structure the enquiry and choose lenders based on feasibility and speed.

Planning requirements vary by lender and project type. Some lenders require full planning permission, while others may consider:

• Outline permission
• Permitted development rights
• Projects awaiting final approval (in some cases)

Lender appetite depends on risk and how likely permission is to complete. We can advise on lender approach based on your planning position.

Yes, but criteria may be tighter. Lenders often assess:

• The strength and feasibility of the project
• The contractor team and professional support
• Deposit and contingency
• Project location and market demand
• Whether you have relevant experience (even if not full developer track record)

First-time developers can improve their chances by presenting a strong appraisal, costings, and a credible contractor team.