- Facility size
- £300k – £30m+
- Land LTV
- Typically up to 65-70%
- Build costs funded
- Often up to 100% of costs
- Term
- 9-24 months, drawn in stages
How lenders assess GDV and leverage
Development lenders lend against a percentage of land value and a percentage of build cost, capped separately against a percentage of the finished GDV — usually 60-70%. An optimistic GDV or a thin contingency will get stress-tested down by the lender's own valuer, so submitting a realistic appraisal from the outset avoids a re-trade mid-application.
Track record and first-time developers
Lenders separate developers by completed scheme count. First and second-time developers usually see lower leverage and closer monitoring (monthly QS reports, tighter drawdown conditions) than an established developer with a five-plus scheme history — but a strong professional team (contractor, architect, QS) can offset a thin personal track record.
Mezzanine and stretch senior structures
Where senior debt caps out below the equity a developer wants to commit, mezzanine finance or a stretch senior facility can bridge the gap, usually at a higher blended cost but without diluting equity to a joint venture partner. We size these against the actual profit margin left in the deal, not just the headline appetite of the mezzanine lender.
Drawdown and monitoring surveyor process
Funds release in stages against certified work, checked by an independent monitoring surveyor appointed by (and paid for by) the borrower but reporting to the lender. Cashflow planning needs to account for this lag — contractors are rarely paid the same week a drawdown is requested.
Exit strategy: sale vs refinance
Some schemes are built to sell, others to hold as investment stock refinanced onto a term facility at practical completion. Lenders want the exit stated up front and will price and structure differently depending on which it is.
Frequently asked
How much deposit does a developer need?
It varies with leverage on land and build cost, but developers typically need to fund 25-35% of total scheme cost themselves, whether as cash, land equity or JV partner capital.
Can I get 100% development finance?
Rarely on land cost, but 100% of build cost is common where the land is already owned or has enough equity to serve as part of the security.
What is a monitoring surveyor and who pays for one?
An independent QS who certifies work completed before each drawdown, protecting the lender's position. The borrower pays their fees, typically built into the facility cost.
Do I need planning permission before applying?
Full planning materially improves terms and speed; some lenders will consider funding at outline stage or even pre-planning at lower leverage, but pricing reflects the added risk.
What happens if costs overrun mid-build?
Most facilities include a contingency line; beyond that, lenders may request additional borrower equity or a cost-overrun facility before releasing further drawdowns.
Get your scheme appraised
Send your appraisal and we'll come back with realistic leverage and lender fit — call 0345 2690628.
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