Development Finance
Discover tailored Development Finance solutions for new build projects, renovations, or mixed-use developments. At Connect Mortgages, we offer access to a vast panel of lenders, ensuring competitive rates, flexible terms, and fast approvals. Whether you're a first-time developer or managing a multi-unit site, our specialist mortgage advisers help secure the right funding solution. From bridging finance to exit strategy planning, we support you through the entire process.
What is Development Finance
Development finance is a short-term, interest-only loan designed to fund residential or commercial property projects. It can cover land acquisition, construction costs, professional fees, and contingency buffers. You typically repay the loan in full upon project completion, often through development exit finance or property sales.
This type of finance is popular among:
- Experienced developers
- New-build project managers
- Property investors converting buildings into flats or HMOs
- Landowners seeking planning gain opportunities
Types of Projects We Can Finance
Our expert mortgage advisers can help you secure funding for:
- Ground-up developments: residential or commercial new builds
- Light to heavy refurbishments: including structural changes
- Conversions: turning commercial units into homes
- Mixed-use sites: combining retail, office, and residential units
- Land with or without planning permission
Each project is unique. That’s why we work with a wide panel of development lenders to source finance based on your timeline, exit strategy, experience, and loan-to-cost ratio.
Understanding the Importance of Development Finance
Development finance is a vital funding solution that enables property developers to launch and complete residential, commercial, or mixed-use projects. By providing short- to medium-term finance, it supports new build schemes, renovations, and conversions, helping to regenerate communities and stimulate local economies.
Whether you’re a small business, an entrepreneur, or a first-time developer, development finance offers access to essential capital when traditional loans may not apply. It bridges the funding gap, enabling property investment even in complex or time-sensitive scenarios.
At Connect Mortgages, our experienced mortgage advisers offer tailored guidance and direct access to a wide range of development finance lenders. We ensure every project is assessed for affordability, regulatory suitability, and strategic planning, in line with mortgage compliance standards.
We also support developers with complementary solutions such as short-term bridging finance and exit strategies, helping you plan with confidence beyond the build phase.
For personalised advice on funding your next project, speak with an expert or explore our wider commercial mortgage services.
Who Offers Development Finance?
Development finance is available through a wide range of lenders that support property projects of all scales. These include mainstream high street banks, specialist development finance lenders such as LendInvest, Shawbrook, and OakNorth, as well as challenger banks and private equity firms.
In addition, alternative funding sources like bridging finance providers, crowdfunding platforms, and government-backed schemes also offer flexible options tailored to developers. These lenders typically provide funding for ground-up new builds, refurbishments, or mixed-use commercial developments.
Borrowers can choose between debt-based solutions like short-term development loans or equity-backed funding depending on the structure of the project. Aggregators and comparison tools such as Brickflow allow developers to explore multiple commercial development finance options in one place.
At Connect Mortgages, we guide you through this complex landscape. Our team of experienced mortgage advisers will match your project with the right lender and help you secure terms aligned with your build schedule, budget, and exit strategy. To learn more, explore our bridging finance page.
CASE STUDY:
“.. A Limited Company was looking for a facility of £1.3m to buy a plot of land and develop it into residential property. Whilst one lender offered a 7% rate it had a 1% of GDV (end value) as the fee. Whereas an alternative lender offered a 9% rate with a fee of 1% of the initial facility amount instead. The Gross Development Value (GDV) was £2,500,000. As this case study demonstrates, we look at a variety of options available and work with the client to get the suitable deal for their circumstances..“
How Does Development Finance Work?
Development finance is a specialist funding solution designed to support private investors, developers, and individuals undertaking self-build or large-scale refurbishment projects. In most cases, investors use a limited company structure to manage their developments. However, when the build is intended as a personal residence, the project is typically held in the investor’s own name and referred to as a self-build mortgage.
Understanding the Project
Before a lender can approve any property development loan, they require full visibility into the project’s structure and viability. This includes:
- The land acquisition cost, whether it’s a plot with or without planning permission
- A detailed breakdown of the construction or refurbishment plan
- The projected build cost and timeline
- The estimated Gross Development Value (GDV) is the expected market value of the project upon completion.
The more detailed and realistic the plan, the stronger the case for funding approval.
How Development Finance is Released
Unlike traditional mortgage products, development finance loans are disbursed in structured phases. Initial funding may be provided for the land purchase or the first stage of the build, but subsequent funds are only released once agreed construction milestones are completed and verified.
Most lenders will expect the developer to contribute equity at the outset, either through land ownership or early capital contributions. This staged approach reduces risk and ensures responsible borrowing in line with mortgage compliance best practices.
If you’re also considering bridging finance, you can explore how staged releases differ in our guide to short-term bridging finance.
Repaying or Exiting the Development Loan
Development finance is designed as short-term lending, usually between 6 to 24 months, depending on the build complexity. Once the development is complete, the loan is repaid by one of two typical exit strategies:
- Sale of the completed property, using proceeds to clear the debt
- Refinancing to a standard mortgage product, suitable for long-term hold and rental
For developers wishing to retain the property while unlocking capital, a development exit bridge loan can provide fast access to equity before securing a long-term mortgage.
To discuss the best exit strategy for your project or explore buy-to-let mortgage options, speak with one of our mortgage experts for personalised guidance.
Mortgage Advice..
Thinking of getting a mortgage? Our experienced team of skilled mortgage advisers are here to offer the essential guidance you require. Relying on our comprehensive understanding of the mortgage market, we’ll ensure you secure the perfect mortgage to suit your specific situation.
Mortgage Advice..
Thinking of getting a mortgage? Our experienced team of skilled mortgage advisers are here to offer the essential guidance you require. Relying on our comprehensive understanding of the mortgage market, we’ll ensure you secure the perfect mortgage to suit your specific situation.
Benefits of Development Finance
Development finance is a flexible funding solution designed to support property developers by providing capital that may not be available from traditional mortgage lenders. It enables new builds, conversions, refurbishments, and mixed-use projects to proceed confidently, even when timelines or funding gaps are tight.
Key Benefits of Development Finance
- Substantial Capital Access: Development finance provides tailored funding across the project lifecycle, from land acquisition and planning through construction to final delivery. This empowers developers to take on larger or multiple projects that might otherwise be financially out of reach.
- Staged Funding for Better Cash Flow: Funds are released in stages (tranches) tied to project milestones. This staged drawdown structure ensures that capital is available precisely when needed and avoids paying interest on unused funds. It’s an effective way to maintain healthy cash flow during development.
- Quick Turnaround and Fast Approvals: Unlike standard mortgage products, development loans often offer faster decision-making and funding release. This allows developers to act quickly on opportunities, a crucial advantage in competitive markets.
- Interest Roll-Up Structure: Most development finance agreements use a roll-up structure, meaning you repay the total interest at the end of the term. This removes the burden of monthly payments during the build phase and frees up working capital.
- Increased Leverage and ROI: Using development finance allows developers to leverage their available capital to fund a larger share of the project cost. This boosts return on investment and allows for broader project pipelines or more ambitious site plans.
- Expert Support and Project Viability Checks: Many specialist lenders provide professional guidance alongside funding. They conduct thorough project assessments, helping you avoid common risks and increase the likelihood of successful completion. This expert oversight adds reassurance and aligns with mortgage compliance best practices.
- Versatile Funding Options: Development finance can be structured for a range of projects, including:
- Ground-up new builds
- Residential conversions
- Light and heavy refurbishments
- Commercial and mixed-use schemes
Traditional mortgages often exclude these types of projects. Development loans fill that gap with tailored solutions.
Broader Economic and Social Benefits
- Driving Economic Growth: Development finance plays a critical role in supporting the UK economy. By funding construction, site conversions, and large-scale development projects, it creates jobs, stimulates local supply chains, and drives regeneration in underinvested areas. This financial support helps boost regional economies and contributes to national economic expansion.
- Tackling the UK Housing Shortage: Access to development finance for residential property is critical to meeting ongoing housing demand. It enables the delivery of much-needed new homes and supports the refurbishment of older properties. These developments breathe new life into communities, increase housing availability, and enhance overall neighbourhood quality.
- Encouraging Sustainable Innovation: Modern property development lenders are increasingly backing projects that prioritise environmental sustainability and energy efficiency. Whether it’s low-carbon construction or eco-friendly refurbishment, financing is now better aligned with green development goals, driving the sector toward long-term innovation and compliance with evolving regulations.
- Supporting Market Vitality and Long-Term Vision: Development finance transforms property plans into completed assets. It not only empowers developers but also strengthens the UK property market by increasing housing stock, commercial space, and community infrastructure. With expert guidance from specialist mortgage advisers, developers can align funding with planning, build schedules, and exit strategies while remaining compliant with financial conduct standards.
For tailored support on funding your next commercial project, explore our full range of commercial finance options.
Development Finance vs Bridging Finance: What’s the Difference?
When planning property projects, understanding the right funding type is crucial. Development finance and bridging finance serve different needs based on project scale, timing, and financial structure.
What Is Bridging Finance?
Bridging finance is a short-term loan solution designed to fill funding gaps quickly. It’s commonly used for fast property purchases such as auction deals, chain breaks, or minor refurbishments.
- Purpose: Ideal for temporary funding needs, light property refurbishments, or time-sensitive purchases.
- Funding Type: A lump-sum payment released upfront.
- Assessment: Based on the current market value (loan-to-value or LTV) and a clear exit strategy, such as a sale or refinance.
- Speed: Extremely fast – funds can be arranged in a matter of days.
- Best For: Quick acquisitions or smaller projects requiring immediate liquidity.
Explore more about bridging finance and how it can help bridge your short-term funding gaps.
What Is Development Finance?
Development finance supports larger, more complex construction projects like new builds, conversions, or major renovations.
- Purpose: Funds comprehensive property developments from the ground up or through heavy structural changes.
- Funding Type: Money is drawn down in phases, aligned with build milestones, and verified by professional surveyors.
- Assessment: Lenders focus on the Gross Development Value (GDV), build costs, experience of the development team, and demand in the area.
- Speed: Typically slower due to greater due diligence and project tracking.
Best For: Professional developers managing high-value or multi-unit developments needing phased capital.
If you’re planning a build or conversion, speak with our mortgage advisers to secure tailored development finance.
Key Differences Between Development and Bridging Finance
| Feature | Bridging Finance | Development Finance |
|---|---|---|
| Purpose | Temporary funding, quick purchases | Long-term construction and renovations |
| Funding | Lump sum upfront | Staged drawdowns |
| Assessment | Based on current LTV | Based on projected GDV |
| Speed | Fast (days) | Slower (due diligence required) |
| Best For | Small projects, speed-sensitive buyers | Experienced developers, large projects |
Which Type of Finance Is Right for You?
Choosing between bridging and development finance depends on your project’s size, complexity, and timescale. Bridging loans offer speed and simplicity for smaller needs, while development finance offers structured support for more ambitious builds.
At Connect Mortgages, we guide you through the options, lender criteria, and your eligibility. Whether you’re a first-time developer or a seasoned investor, our team provides tailored advice and access to exclusive lenders.
Ready to discuss your next project? Contact our team today for personalised support and a free consultation.
FAQs: Development Finance
Most frequent questions and answers about development finance
Developers will need some initial funds to acquire the asset or start the first stage of development. Development funding can then be raised to fund each of the phases of the development until it is complete. The property can then be sold to repay the development loan, or refinanced to a term loan such as a buy-to-let.
What next?
We will come back to you quickly to let you know how we can help. If you would like to speak to us immediately, call us on 01708 676 111.
Looking for our intermediaries site?
Liz Syms is the CEO and Founder of Connect Mortgages and Connect for Intermediaries, a leading firm specialising in property investment finance. With more than 25 years of experience in the mortgage and financial services industry, Liz has helped thousands of clients secure both residential homes and investment properties.
Renowned for her expertise and commitment to excellence, Liz is passionate about delivering tailored, high-quality advice on mortgages and protection. Her leadership has positioned her as a trusted figure in the sector, and under her guidance, Connect Mortgages has expanded to a national team of over 300 advisers.
Driven by a vision to make Connect Mortgages one of the UK’s most successful mortgage networks, Liz continues to champion professional standards and client-focused solutions across the industry.
About the Author
Liz Syms is the CEO and Founder of Connect Mortgages, a specialist in finance for property investment. With over 25 years of experience in mortgages and financial services, Liz has helped countless people get their dream homes and investment properties. She is passionate about giving her clients the best advice possible when it comes to financial decisions relating to mortgages and protection and is dedicated to providing the highest quality of service. With her wealth of knowledge in the industry, Liz is a respected leader in mortgages and financial services and has grown her team to over 300 advisers nationally. She strives to make Connect Mortgages one of the most successful companies in its field.