Development Finance Guides

Loan to gross development value: the facility measured against what the finished scheme will be worth, rather than against what you are paying for the site. Senior debt typically caps at 65% to 70% LTGDV. It is the number that determines how much cash you need to put in.

Typically 20% to 35% of total project cost, with lenders funding up to 100% of build costs in stages once your equity is in. Experienced developers with a track record on comparable schemes reach the lower end; a first scheme sits at the higher end.

Yes, but priced for it, usually 1.5% to 3% per annum above an experienced developer on the same site, with more equity required and a closer look at your contractor, architect and quantity surveyor. A credible professional team does more to improve terms than anything else available to a first-timer.

The land or purchase tranche is advanced at completion. Build costs are then released in stages against certified progress, usually monthly, after a monitoring surveyor has inspected. Interest is charged only on the drawn balance, which is why a development facility is cheaper than it looks on the headline rate.

An independent surveyor appointed by the lender to verify build progress, cost to complete and programme before each drawdown is released. You pay for them. Budget £1,500 to £3,000 for the initial report and £500 to £1,000 per subsequent visit.

You ask for an extension before the facility expires, not after. Most lenders will extend by three to six months for a fee of around 1%, provided the scheme is progressing and the exit still stands up. Running past the term without agreement moves the loan to a default rate, which can be several times the contracted rate.