Development finance its crucial to ensure you are with the right lender, depending on your plans & borrowing amounts.
Very simply put, you put down your deposit (typically 30% or higher if no other assets are involved), start the work and then have a project funded ‘in arrears’ till completion.
So you complete the initial work on the project to a pre-agreed standard, in most cases the lenders surveyor would confirm the work is done and the lender would release the next tranche of funds for the next stage of the development. This continues until the project is completed.
Then, depending on your plans, the asset(s) are sold or we refinance onto a more standard Mortgage as required. Of course lot more to it than that in regards to the underwriting, funding and planning all of which we cover off upfront.
Experience of the developer(s) is crucial to obtaining the funds at the right price and this is where we work with you, to put together the proposition for the lender to ensure your project is well funded at the right price.
Something which over the years, more and more lenders have become amenable too so certainly can be done.
Simply put, its bigger projects and bigger numbers. A draw-down bridge will typically see a maximum of 2 or 3 drawdowns on a project totalling anywhere between £100k to £250k. Development finance lenders typically start at £500,000.00 although for many a minimum initial loan of a £1,000,000.00 is the standard.
For the larger projects the lenders who specialise in these would want a minimum initial loan of £5,000,000.00 to even begin a discussion.
As mentioned above it really is crucial to ensure that you are with the right lender for your plans to ensure your project gets the financing when it needs it.
Certainly quite common to see a ‘JV’ between different parties. Whether that’s several investors putting the initial finance in or perhaps one investor and the contractor sharing the profits, lenders are more than comfortable with JV’s.
Tailored Mortgage Solutions – Get in Touch
Have questions? Need a quote? Fill out the form below or call us today for expert mortgage advice that’s tailored to you.
1
We will have a chat about your plans and goals.
2
You receive tailored recommendations, quotes & next steps.
3
We submit your application and manage everything to completion.
From a finance perspective, lenders aren’t overly concerned about which structure suits best as the project underwrite is broadly the same, with the major difference being the Personal Guarantee requirements.
Really what it comes down to is what you and your Accountant would advise. Based on experience, I typically tend to see clients proceed more down an LLP route if this involved a JV between partners who don’t do this regularly, putting in different amount of finance and time. A Limited Company tends to be more for clients who do this regularly.
Certainly it is a huge benefit to have planning sign off’s in place before proceeding. Lenders can still lend of course on land/buildings without the relevant planning in place however the LTV would be impacted and for the newer developers it can be seen as a higher risk as there is no guarantee that planning will be granted, or even it is, the planning sign off’s make a project not feasible.
Certainly buying land without planning is something I would tend to see for the more experienced developers, who know the area well and what is likely to be achievable. Or perhaps those where we have suitable exit plans lined up regardless.
As always we can chat through your plans to ensure the right outcome and with potentially pre-planning enquiries and exclusivity rights that can be utilised whilst planning is sorted, there are options we can consider.
It is something I explore with clients on any property finance deal, what is the lowest cost option to proceed and putting those options in front of you.
It really does come down to experience is my view. Development Finance lenders obviously have a strong vested interest in ensuring a project remains viable and can have their uses in terms of project viability and monitoring throughout the build. Similarly I would also be looking at the numbers to ensure a viability of a project and ensure that from a mortgage perspective the end build remains ready to be Mortgaged to maintain the value of GDV of the build.
In the same vein, depending on the financing element of the project and other assets in the background this the subject project finance free and utilising other assets could overstretch your finances.
So whilst clients could potentially avoid the development finance element of a project, keeping the asset mortgage free could impact finances longer term and without a suitable broker and/or lender involved there may be decision’s made which could impact future saleability.
In terms of timescales properly packaged application to offer to completion typically takes around 6 – 8 weeks although if this needs to be quicker, with the right lender this can be catered for. In most cases interest is rolled up so there are no monthly payments to make whilst you continue with your project.
So perhaps one of the more complex areas of lending with plenty to consider and always every avenue will be explored by us to ensure that funding can be sought and your project moves forward in line with your plans.
Registered in England and Wales No. 16065530
The Wright Mortgage Broker is an Appointed Representative of Connect IFA Limited 441505 which is Authorised and Regulated by the Financial Conduct Authority and is entered on the Financial Services Register:
https://register.fca.org.uk/s/ under reference 1023919.
The FCA do not regulate some forms of Business Buy to Let Mortgages and Commercial Mortgages to Ltd Companies.
The information contained within this website is subject to the UK regulatory regime and is therefore targeted at consumers based in the UK.
Your property may be repossessed if you do not keep up repayments on your mortgage.
Typically there will be a fee for mortgage advice, the precise amount will depend on your circumstances which you will be made aware of before you choose to proceed, but typically this is £450.00.
© 2025 The Wright Mortgage Broker Ltd
Not all services we offer are covered by the FCA
Commission Disclosure: We are a credit broker and not a lender. We have access to an extensive range of lenders. Once we have assessed your needs, we will recommend a lender(s) that provides suitable products to meet your personal circumstances and requirements, though you are not obliged to take our advice or recommendation. Whichever lender we introduce you to, we will typically receive commission from them after completion of the transaction. The amount of commission we receive will normally be a fixed percentage of the amount you borrow from the lender. Commission paid to us may vary in amount depending on the lender and the product. The lenders we work with pay commission at different rates. However, the amount of commission that we receive from a lender does not have an effect on the amount that you pay to that lender under your credit agreement.
It is our intention to provide you with a high level of customer service at all times. If there is an occasion when we do not meet these standards and you wish to register a complaint, please write to: Compliance Department; Connect IFA Ltd, 39 Station Lane, Hornchurch, RM12 6JL or call 01708 676110. If you cannot settle your complaint with us, you may be entitled to refer it to the Financial Ombudsman Service www.financial-ombudsman.org.uk
Website By Mutatio Creative
