Development finance works by providing money to the borrower, usually in the form of a loan. The value of the tranches relates to the value of work completed and is typically paid after the work is completed. This money can then be used to fund a specific development project, and not for general use by the borrower. Development finance typically consists of two components, with one being for the development costs and another typically for part of the land cost. The loan can be repaid by sales or refinance of the project.

The main difference between finance and development finance is that the latter is used specifically for development projects. Finance can be used for a variety of projects, from buying a car or a house to starting a business. Development finance, however, is focused solely on development projects, such as constructing a new house or renovating a business premises.

Development finance offers a number of benefits: 

• Access higher leverage than traditional bank loans
• Preserve capital across multiple projects
• Roll up interest during construction
• Fund both land acquisition and build costs within one facility

The repayment term for development finance can vary, depending on the project and the lender. The term of the loan needs to be sufficient to allow time to commence works, complete the construction, and have time for the sales or refinance to complete.

Development finance offers a valuable funding solution for property developers, businesses, and entrepreneurs seeking financial support for their development projects. This flexible financing option can be utilised for various types of projects, including new builds, conversions, refurbishments, renovations, and extensions. Whether you’re looking to fund residential or commercial property developments, development finance provides the capital needed to bring your vision to life. From funding construction projects to converting buildings into flats or offices, property development finance caters to the diverse needs of ambitious individuals, entrepreneurs, and organisations in the real estate industry.

Yes. While experience is important, we assess the strength of your professional team, including contractors, architects and project managers, to ensure the scheme is technically and commercially supported.

Most developers borrow via a Special Purpose Vehicle or UK limited company. We are experienced in lending to these structures and can discuss alternative arrangements where appropriate.

Yes, we regularly work with brokers and introducers and value long-term intermiediary relationships.

Loan size depends on project fundamentals, including total costs, projected end value, location and borrower experience. Facilities are structured around a combination of Loan to Cost and Loan to Gross Development Value metrics. 

Your required contribution depends on risk profile and leverage. In suitable cases, developers may contribute around 10 to 15 percent of total project costs. Final terms are subject to valuation and underwriting.

True 100 percent funding is rare. While high-leverage structures may reduce your cash input, lenders typically require some level of developer equity or additional security.

Traditional senior debt typically funds around 50-70 percent of a project’s end value. Stretched Senior finance is a higher-leverage structure that can extend funding further, potentially up to 90 percent of total project costs in suitable cases, subject to valuation and project fundamentals.

Yes. Interest is typically rolled up and added to the loan balance, meaning no monthly repayments during construction. The full balance is repaid at exit.

Hope value refers to the uplift in land value based on potential planning or development prospects. Existing equity in land, including hope value, may be considered as part of your contribution, subject to independent valuation.

In most cases, directors are required to provide Personal Guarantees as part of the lending structure. Terms are discussed transparently during the offer stage.

Eligible projects may include:

• Ground-up residential developments
• Office to residential conversions
• Permitted Development schemes
• Heavy refurbishments
• Mixed-use developments

Each scheme is assessed on its commercial viability and local market strength.

Yes. We regularly consider Permitted Development and conversion projects, subject to viability, planning compliance and valuation.

In some cases, we can provide land-only or early-stage finance to help secure a site. This may transition into a full development facility once build costs and contractor arrangements are finalised.

We generally expect a fixed-price contract, such as JCT or similar, to ensure cost certainty. Alternative arrangements may be considered depending on experience and project structure.

Yes. We are supportive of Modern Methods of Construction and modular builds, provided systems carry recognised structural warranties such as NHBC or BOPAS and are mortgageable for future buyers.

Funds are released in stages as works progress. An Independent Monitoring Surveyor verifies progress before each drawdown to ensure the project remains on track.

Development finance is typically repaid through the sale of completed units or by refinancing onto a longer-term facility.

If a scheme is complete but sales are ongoing, you may be able to transition to a Development Exit loan, subject to new underwriting and credit assessment or we may extend the existing loan. 

Yes. If your strategy is to retain units for rental income, we can discuss transitioning to a Build to Let facility following completion and tenancy.

Our primary focus is England and Wales. Projects are assessed based on local market fundamentals, scheme viability and demand.

Development finance provided to limited companies and SPVs is generally unregulated. BLG does not offer regulated residential mortgages for owner-occupiers but operates with professional transparency and industry best practice standards.