Funding released as the building goes up.
Development finance is not one loan — it is a facility drawn down in stages as work is completed and inspected, so you pay for the money only once you need it.
Land first, then the build, in instalments
What this meansFunding for building or converting property, released in stages as the work is signed off rather than all at once, so you pay interest only on what you have drawn. typically covers a proportion of the land purchase and most of the build cost. The build element arrives as What this meansMoney released in instalments as building work is completed and inspected, rather than in one lump at the start., released after a monitoring surveyor confirms the work is done, which keeps interest on what you have actually drawn.
Lenders size the facility against the What this meansWhat the finished scheme is expected to be worth once the work is complete. Development lending is usually sized as a percentage of it. — what the finished scheme will be worth — and against total costs. Being able to evidence both, credibly, is most of the application.
What lenders want to see
Development lending is as much about the team and the plan as the site.
Typically a good fit when
- Planning permission granted, or a clear and realistic route to it
- A costed schedule of works from a builder you have actually engaged
- Relevant experience — yours, or a contractor whose track record stands in for it
- Meaningful equity in the deal, usually 20–35% of total cost
- An exit: sale of the units, or refinance onto a term mortgage
How the money is priced
Expect a monthly interest rate on the drawn balance, an arrangement fee, an exit fee often calculated on What this meansWhat the finished scheme is expected to be worth once the work is complete. Development lending is usually sized as a percentage of it., plus valuation and monitoring surveyor costs throughout the build. Rolled-up interest is common, so nothing is payable until exit.
The total cost of finance on a scheme frequently lands between 8% and 15% of the build cost. Budget for it as a line in the appraisal from the start — schemes get into trouble when finance costs are treated as an afterthought.
Questions we are asked most
Can I get funding without planning permission?
For the land purchase, sometimes — usually via bridging finance at a lower loan to value, with development funding arranged once permission is granted. Lenders will not fund a build against a site that may never be buildable.
Do I need development experience?
It helps considerably, and its absence is not always fatal. A first-time developer with an experienced main contractor, a realistic appraisal and decent equity can get funded. A first-time developer doing the work themselves on a thin margin generally cannot.
What happens if the build overruns?
Overruns are common, so build contingency into both the programme and the budget — 10% is a sensible minimum. Extending a facility is possible but costs money and goodwill.
Tell the lender early if the timetable slips. Lenders deal with delays all the time; what they react badly to is finding out late.
Have a scheme you want funded?
Send the appraisal, the planning position and the schedule of works, and we will tell you where it stands.
Or email info@nemekfinance.co.uk · Call 07483 159369
No obligation, no credit check to talk, and a straight answer if finance is not the right move.