Development Finance Lender Criteria

The lender will lend based on the lower of the loan to cost and loan to GDV.

The difference between the total loan and amount released on Day 1 is that stage payments are made throughout the development project instead of being given as one amount.

It is usual that the lender will instruct a surveyor to inspect a site before each stage of payment in order to be satisfied that the work is being carried out to a good standard. They will also want to make sure that the work is progressing well and is on track. The cost of these inspections will be outlined in your offer letter.

As a result of these visits, the lender will assess your costings to check that the cash flow is running smoothly throughout the project and stage payments will be able to be met. It is always advisable to set up a contingency fund to cover unexpected costs that cover delays and any increases in costs.

Development Finance criteria and step by step guide to the process

Applications for development finance are considered on a case by case basis. But here are the important points to note…

Term of loan: On average from 18-24 months, but some lenders can lend for up to 36 months

Loan size: This starts from £50,000 with no maximum limit

Interest rates: these can vary please see interest rate charges and fees section. Interest will be rolled up throughout the project so you do not need to pay this monthly.

Security: Any security will be considered

Where we cover? We can provide cover all over the United Kingdom.

Credit history: We can provide funding regardless of credit history. However, if a lender sees that you have a bad credit history then lending may be restricted and it is likely that the interest rates charged will be higher.

Planning permission: Finance can be provided for developments with or without planning permission.

Drawdowns can be made along with your cash flow requirements subject to a visit by an appointed surveyor.

Exit route: It is important for the lender to be able to see that a viable exit route is presented before they accept your application and agree to finance your development. Also, please note that in some circumstances where the Loan to Value is high, an exit fee may be payable.

Repayment of the property development finance loan

This can be achieved using one of the following three routes:

  • Sale of site
  • Refinance to a term loan
  • Refinance to another project whilst the site is sold

This will form part of your exit strategy that you will put forward to the lender at the outset. Let Finbud know if you plan to refinance and we will be happy to provide you with an overview of likely costs to help you in projecting future income.

Development finance for overseas applicants

Here at Finbud, we can even arrange funding for overseas applicants of UK property developments. Such applications can be for foreign nationals, ex pats and can be agreed even if the potential borrower has no ties to the U.K. The borrower would need to set up an SPV Ltd company to purchase a property and complete the transaction for a loan to be agreed.



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