Development Finance
Development
Finance
Development Finance provides funding for property projects, from small refurbishments to multi-unit developments at key stages.
What Is Development Finance?
Development finance is a short-term loan used to fund property construction, conversion, or major refurbishment. It provides lump sums of cash at different stages of a project to cover costs such as land purchase and builder payments. As each stage is completed, additional funds are released for the next phase. Once the project is finished, the loan is typically repaid through the property’s sale or by refinancing into a longer-term mortgage.
Types Of Development Finance
Residential Property Development
Funding for building or renovating homes, whether it’s a single house or a larger housing scheme. Developers use this finance to cover land purchase, construction, and finishing costs before selling or refinancing.
Commercial Development Finance
Supports projects with a primarily business focus, such as office buildings, retail units, or mixed-use sites that include both residential and commercial elements.
Refurbishment and Conversion Finance
Covers improvements or changes to existing buildings, from modernising interiors to full structural conversions, including projects that require planning and building regulation approvals.
New Build Finance
Designed specifically for brand-new construction projects, covering costs from groundwork and planning through to completion.
Unit Developments
Caters to projects with multiple units, whether residential or mixed use, suitable for small apartment blocks through to larger multi-unit schemes.
Exit Funding
Provides bridging finance between completing a build and selling or refinancing, giving developers time to execute their exit strategy.
Mezzanine Development Finance
Acts as secondary funding behind the main development loan, reducing the need for a large upfront deposit and supplementing the primary finance package.
Income
To qualify for a Shared Ownership Scheme, your household income needs to be less than £80,000 per year. If you live in London, this must be less than £90,000.
Current Homeowner Status
You must be a first-time buyer, have a history of being unable to buy or are a current shared owner.
Age
Applicants for the Shared Ownership Scheme must be at least 18 years old.
Your Citizenship and Residency
You must be a resident of the UK or if you are a non-UK citizen have indefinite leave to remain. You may be required to have local connections depending on some authorities’ requirements.
Deposit and Credit
A deposit is needed (typically 5%), and you should have a good credit history.
Differences Between Commercial and Residential Mortgages:
Higher deposit requirements (typically 25-30%)
Shorter maximum loan terms (up to 30 years)
Stricter eligibility criteria based on business creditworthiness
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Why Choose UKMC
Expert Guidance
Expert GuidanceUKMC helps you navigate the complexities of development finance with clarity and confidence. Our advice is tailored to your financial circumstances, credit history, and borrowing needs.
Wide Range of Options
Wide Range of Options You have access to a broad selection of development finance products. UKMC compares thousands of options to identify the most suitable solution for your business.
Tailored Solutions
Tailored Solutions Whether you are purchasing new premises, refinancing existing properties, or expanding your investment portfolio, UKMC provides guidance every step of the way. Our support ensures you make informed decisions and secure the most appropriate mortgage solution for your business.
How To Apply For Development Finance
Contact An Adviser
Reach out to our expert advisers who will guide you in securing the most appropriate loan for your development project. You will be paired with a dedicated case manager who will oversee the process, ensuring a smooth and efficient experience.
Application Process
Your adviser will conduct a thorough market search to identify the best financing options available. They will manage your loan application, collect all required information, and present it to the lender to facilitate approval.
Completion Drawdowns
Once the project reaches completion, the first drawdown of funds will be released for land purchase or the initiation of construction. Additional funds will be provided as needed for subsequent stages of the development.
Repayment Process
Upon completion of the project, repayment of the loan will be required. This is typically done through the sale of the property or by refinancing with a longer-term mortgage, depending on your financial strategy.
Contact An Adviser
Reach out to our expert advisers who will guide you in securing the most appropriate loan for your development project. You will be paired with a dedicated case manager who will oversee the process, ensuring a smooth and efficient experience.
Application Process
Your adviser will conduct a thorough market search to identify the best financing options available. They will manage your loan application, collect all required information, and present it to the lender to facilitate approval.
Completion Drawdowns
Once the project reaches completion, the first drawdown of funds will be released for land purchase or the initiation of construction. Additional funds will be provided as needed for subsequent stages of the development.
Repayment Process
Upon completion of the project, repayment of the loan will be required. This is typically done through the sale of the property or by refinancing with a longer-term mortgage, depending on your financial strategy.
Things to Consider
Benefits
Staged Funding for Projects
Development finance usually releases money in stages as your project progresses. This helps keep cash flow steady throughout construction, so you can focus on delivering each phase without funding gaps.
Built-In Project Support
These loans are designed specifically for development work, whether it’s major renovations, conversions, or new builds, providing a funding structure that matches how property projects unfold.
Flexible Timing for Repayment
Repayments are aligned with long-term plans, such as selling the finished property or refinancing into a traditional mortgage once the build is complete. This gives you time to maximise value before settling the loan.
Risks and Considerations
Higher Costs Than Standard Mortgages
Development finance typically comes with higher fees and interest than traditional residential mortgages. It’s important to budget for arrangement fees, legal costs, and other charges in addition to interest.
Lender Criteria Can Vary
Each lender has its own requirements and appetite for risk, so not all products will be suitable for every borrower or project type. Comparing multiple lenders is often necessary to find the right deal.
Regulated vs Unregulated Loans
The type of development can affect your protections, for example, projects with a significant residential element may be regulated, while purely commercial developments usually are not.
Need for a Solid Exit Strategy
A clear plan for repaying the loan is essential, typically through the sale of the finished units or refinancing with a longer-term mortgage. Without a credible exit strategy, lenders may be reluctant to approve the loan.
what our clients saying about us
At the end of my tether I was introduced to Sam from UKMC.
Previous advisors had failed to find me any deals worth looking at and I was feeling most despondent. Destined to continue paying waaaay too much for my mortgage.
Creative Director, TUX Creative Co
At the end of my tether I was introduced to Sam from UKMC.
Previous advisors had failed to find me any deals worth looking at and I was feeling most despondent. Destined to continue paying waaaay too much for my mortgage.
Independent Art Director
At the end of my tether I was introduced to Sam from UKMC.
Previous advisors had failed to find me any deals worth looking at and I was feeling most despondent. Destined to continue paying waaaay too much for my mortgage.
Creative Developer, Studio Gusto
Frequently asked questions
Got questions? Let’s answer them
What is development finance?
Development finance is a short-term loan designed to fund property development projects, including renovations, conversions, or new builds, helping you complete a project before selling or refinancing.
Who can get development finance?
These loans are typically for property developers, investors, and experienced landlords looking to fund a project where standard mortgages may not be suitable.
How much can I borrow with development finance?
The amount depends on the project type, property value, and expected end value. Lenders usually offer a percentage of the completed property’s projected value.
How long does development finance last?
These loans are usually short-term, often between 12 and 36 months, allowing enough time to complete the development and either sell the property or refinance into a longer-term mortgage.
What risks should I consider?
Development finance can have higher interest rates and fees than standard mortgages. You also need a clear exit strategy, as delays or changes in property value can affect your ability to repay the loan.
