What is development finance?
Commercial Trust describes development finance as a short-term loan to buy a development site, cover the build costs, or both. It funds new builds, conversions, renovations and refurbishments across residential, mixed-use and commercial property. It's the bigger cousin of a bridging loan for property investors. Light works usually fit a bridge better, and Commercial Trust says as much.
How is development finance measured?
By two ratios rather than one LTV:
- Loan to cost (LTC): the loan as a share of the land and build costs.
- Loan to gross development value (LTGDV): the loan as a share of what the finished scheme will be worth.
| Published example (read 2 November 2026) | Loan size | Max LTC | Max LTGDV | Term |
|---|---|---|---|---|
| Shawbrook | £1m–£30m | 85% | 65% new build · 70% refurbishment | Up to 36 months |
| Commercial Trust (broker) | From £30k | Up to 100% | Up to 70% | – |
How is the money released?
In stages, in line with your build schedule. Shawbrook says you draw funds in line with the build programme and pay interest only on what you've drawn. A surveyor usually confirms each stage before the next payment is released.
What will a lender ask for?
Commercial Trust lists a schedule of works or development appraisal, and says deposits for ground-up builds run from 30–45% of the site or land. It names adverse credit, too small a deposit and a lack of similar experience as things that can count against you. First-time developers on ground-up builds are expected to use a contractor. Expect to provide:
- The site, planning status and the appraisal (costs, GDV, contingency).
- Your track record, or your contractor's and professional team's.
- The exit: unit sales, a refinance, or both. If sales are slow at the end, development exit finance can refinance the loan.
Is it regulated?
Generally not when it's for a business or investment scheme. Shawbrook states its development finance is not regulated by the FCA or PRA, and warns that property used as security may be at risk if you don't repay. If you or your family will live in the finished property, see regulated advice options.
Is our partner the right fit?
Connexis's training material gives typical development finance cases of £500k and up. Smaller conversions or refurbishments may suit refurbishment bridging better.
Is bridging right for you?
Bridging is short-term borrowing secured on property, and the lender can take that property if the loan isn't repaid. Only use it with a realistic exit, and compare it with a standard buy-to-let or commercial mortgage first — if you have time to wait for one, it usually costs less. Speak to your accountant or solicitor if you're unsure.