Property development requires capital—often far beyond the reach of personal funds or buy-to-let mortgages.

That’s where development finance comes in. It’s the engine behind:

• New builds
• Conversions
• Heavy refurbishments
• Mixed-use schemes
• Commercial-to-residential projects

In 2025, demand for development funding remains high, and lenders are still eager to back viable schemes—provided they’re well structured.

What is development finance?

Development finance is a short-term loan that funds:

• The acquisition of land or property
• The cost of construction or renovation
• Sometimes the professional fees and contingency

The loan is repaid upon:

• Sale of the completed units
• Refinance onto long-term debt
• Exit via another developer or investor

Terms are typically 6 to 24 months, and funds are drawn in stages as the project progresses.

Who uses development finance?

🧱 First-time developers (with good support team)
🏗️ Experienced developers scaling projects
🏘️ SME builders and construction firms
🏢 Landowners converting or upgrading stock
🏡 Homeowners undertaking significant rebuilds

If you’re planning to build or refurbish at scale, development finance is likely the best route.

How much can you borrow?

Lenders assess the loan based on two key figures:

• Loan to GDV (Gross Development Value): How much they’ll lend vs. the final sale value
• Loan to Cost (LTC): How much they’ll fund of your total costs

Typical ranges in 2025:

📈 Up to 70% of GDV
💰 Up to 85–100% of build costs
🏡 Up to 50–75% of land/property purchase price

You’ll need to contribute some equity—though mezzanine lenders and JV partners can sometimes top this up.

What does development finance cost?

Costs vary depending on experience, risk, and leverage. Expect:

💸 Interest: From 7%–12% per annum (often rolled up)
🔐 Arrangement fees: 1%–2%
🧾 Exit fees: 1%–2% (sometimes based on GDV)
🔍 Valuation and QS fees
🧮 Legal and monitoring costs

A broker can often negotiate blended rates or introduce senior + mezzanine structures to optimise pricing.

What types of development finance are available?

📍 Land with planning

Funds the purchase of land that already has planning permission. Higher LTVs available with full planning.

📄 Land without planning

Riskier. Requires strong experience and evidence of planning potential. Expect lower LTV and higher pricing.

🏚️ Heavy refurbishment

Funding for projects involving structural changes, extensions, or reconfigurations.

🧱 Ground-up development

For brand-new builds on vacant or cleared land. Includes multi-unit residential, commercial, or mixed-use.

🧮 Development exit finance

Allows developers to repay existing finance and gain more time to sell units. Typically cheaper than original funding.

What do lenders want to see?

To get approved, lenders want:

📊 A detailed development appraisal
📐 Plans and planning permission documents
📁 CV of the developer and contractor
💰 Evidence of equity or capital contribution
📈 Realistic GDV and exit strategy
📄 JCT contracts or build schedule
🛠️ Contingency and cost buffers (usually 5–10%)

The better your preparation, the stronger your application.

Exit strategy is everything

Development lenders care most about how you’ll repay the loan.

Exits include:

• Selling the finished units
• Refinancing onto BTL or commercial mortgage
• Refinancing with JV partner or longer-term investor
• Selling the site mid-development (less common)

If your exit is a remortgage, make sure rental coverage or yield supports the new debt.

How Willow helps developers secure finance

At Willow Private Finance, we work with:

• Specialist development lenders
• Challenger banks
• Private investment groups
• Family offices
• Mezzanine funders
• JV partners (in selected cases)

We help:

✔️ Source the right lender and structure
✔️ Package your application professionally
✔️ Coordinate valuations, legal, QS, and lender negotiations
✔️ Advise on exit planning and refinance routes

Whether it’s your first development or your fifteenth, we can help.

Common challenges we solve

🛑 “Lender pulled out last minute”
🛑 “Planning not yet approved”
🛑 “Build costs rising mid-project”
🛑 “No funds for the next stage drawdown”
🛑 “Need help securing the exit refinance”

We know how to move quickly, fix broken deals, and keep your project on track.

📞 Want Help Navigating Today’s Market?

Book a free strategy call with one of our mortgage specialists.
We’ll help you find the smartest way forward—whatever rates do next.