Development Finance
Get the best rates to fund your one unit development or multi-unit scheme.

What is Development Finance?
For the purposes of this content, we will define development finance as funding to build schemes out of the ground or conversion works to an existing building infrastructure where construction costs exceed 30% of the gross development value (GDV) of the scheme.
The definition of development finance is multi-faceted and covers a very wide range of scenarios with differing requirements. The scale can vary from a single unit development with funding of around £150,000 to multi-unit schemes requiring several million pounds in development finance.
The Borrower can be a limited company, partnership or individual borrower. If it is a company, the lender needs to know who the directors and shareholders are. The lender also needs a copy of the accounts if it is an existing entity. You can also borrow through a special purpose vehicle (SPV) company that has been set up for the sole purpose of the development in question.
SPVs are generally the preferred structure for a development finance transaction. For lenders, this makes assessing potential lending much less complicated, and they will place emphasis on the financial status of the SPV directors and their ability to service any borrowing. An SPV is preferred by borrowers, mainly for tax reasons. The SPV can offset any relevant expenses in running the company and the property as business expenses; this includes wages paid to directors and Mortgage interest.
Development funding is provided by both UK clearing banks and specialist finance providers. Development finance facilities are mostly granted up to 36 months but can be longer on more significant schemes.
Loan terms will be expressed differently by different lenders; however, it is the aggregate cost to the client that is the critical calculation, made up of interest, lender fees and third-party fees. Interest can be charged in multiple ways.For example, interest can be compounded and rolled up or deducted from each advance, fixed or linked to base rate or Sonia and may have a minimum payable amount in the event of early repayment.
The interest rate is only one cost to consider, with fees often forming a much greater part of the total costs than other forms of finance. Currently, most lenders charge a 2%arrangement fee with varying fees on exit. At iBrokr we are flexible with our fees, putting you first when completing on the most favourable terms possible.
Gross development value (GDV) is the value of the entire development scheme on completion of the works. This is predominantly assessed on the open market value.
Gross Development costs are the total acquisition costs plus the total construction costs. Lenders have varying appetites which are reflected in Loan-to-GDV and Loan to Cost percentages. Currently, the top end of the market is limited at around 75% LTV, provided LTC does not exceed 85%.
How does the process work?
Start Your Application
Getting started is easy. You can either:
- Use our online application tool to submit key details and supporting documents about your project and funding needs.
- Or, if you prefer a personal approach, schedule a call with one of our finance specialists to discuss your requirements.
Expert Consultation
Once we receive your application, one of our experienced brokers will review your project details, including:
- The type and scale of the development
- Estimated costs and project timeline
- Your financial position and experience level
- Any planning permissions or land ownership details
This allows us to assess the best funding options for you and ensure we align you with the right lender.
Lender Matching & Funding Terms
We have whole-market access, with a panel of 80+ lenders, from high-street banks to private and specialist development finance providers. Based on your project’s needs, we will:
- Present you with the most suitable loan options, including interest rates, loan terms, and repayment structures.
- Negotiate on your behalf to secure the most competitive terms available.
Application Submission & Approval
Once you’ve selected your preferred lender, we guide you through the formal application process, helping with:
- Gathering necessary documentation (development appraisals, cost breakdowns, valuations, etc.) in our borrower portal.
- Liaising with lenders to ensure a smooth underwriting process.
- Addressing any queries to keep things moving quickly.
Funding Release & Project Support
Once your finance is approved, the funds are typically released in stages (drawdowns) to match your development milestones. We continue to provide guidance throughout the process, ensuring any additional funding requirements are handled efficiently.

Representative example:
A property developer looking to build four residential units with a GDV of £2.5M could secure a £1.2M development finance loan over an 18-month term. The lender might provide 70% of the £500,000 land purchase price, requiring a £150,000 equity contribution from the borrower. The estimated £800,000 build cost could be fully funded through staged drawdowns, released as the project progresses and verified by a surveyor.
With an interest rate of 9.5% per annum, charged on the drawn balance and rolled up over the term, the total interest over a 14-month build period could amount to approximately £133,000. An arrangement fee of 2% (£24,000) would also apply, bringing the total repayment to around £1.357M. Repayment would typically be made upon the sale or refinance of the completed development. If the units sell for £2.5M, the borrower could exit with approximately £1.143M before taxes and fees.
Definitions:
Net Loan
The amount a borrower receives after deducting any fees, interest, or deductions from the gross loan.
Gross Loan
The total loan amount approved by the lender before any deductions, including interest, fees, and retained payments.
Interest Rate
The percentage charged by a lender on the loan amount, typically expressed as an annual percentage.
Arrangement Fee
A fee charged by the lender for setting up the loan, usually a percentage of the gross loan amount.
Procurement Fee
A fee paid by the lender to iBrokr for sourcing and arranging the loan on behalf of the borrower.
Exit Fee
A charge imposed by the lender when the loan is repaid, often calculated as a percentage of the loan amount.
Total Costs
The overall cost of borrowing, including all interest payments and associated fees.
Retained Interest
Interest that is deducted upfront from the loan amount to cover the agreed loan term, meaning no monthly payments are required.
Stepped Interest
A variable interest structure where the rate increases or decreases at predefined intervals during the loan term.
Floating Interest
An interest rate that fluctuates based on an external benchmark, such as the Bank of England base rate.
Purchase Price
The agreed amount paid by the borrower to acquire a property or development site.
Open Market Value (OMV)
The estimated price a property would achieve in an open and competitive market under normal conditions.
Gross Development Value (GDV)
The estimated total value of a property or development once it is completed and sold at market rates.
AVM Valuation
An Automated Valuation Model (AVM) valuation uses data and algorithms to estimate a property’s value without a physical inspection.
Desktop Valuation
A valuation carried out remotely using market data, comparables, and online tools, without an in-person site visit.
Red Book Valuation
A formal property valuation conducted by a RICS-registered valuer, following the RICS Valuation – Global Standards (Red Book) guidelines. It provides an independent, professional assessment of a property’s market value.
Decision-in-Principle (DIP)
A lender’s initial confirmation that they are willing to lend, subject to further due diligence and underwriting.
Equity Requirement
The amount of capital a borrower must contribute towards a project, typically expressed as a percentage of the total costs.
Have A Development Project That Needs Financing?
Contact us to get started today.