Development Finance

Development finance is structured differently from a typical mortgage. It’s a short-term, staged loan specifically designed to fund property construction or refurbishment.
The process usually begins with an initial appraisal — you share your project details, costs, plans, and exit strategy. Lenders then issue an Agreement in Principle (AIP) or indicative offer outlining loan size, interest rate, and structure.

Once accepted, funds are typically released in drawdowns, aligned with key build milestones. For example:

• Stage 1: Land or site purchase
• Stage 2: Groundworks/foundations
• Stage 3: Structural completion
• Stage 4: Internal finishing
• Stage 5: Final completion & sign-off

An independent surveyor or monitoring surveyor may visit to verify progress before each release.
Interest is charged monthly and can be rolled up or retained until the end. You repay the full balance when you sell, refinance, or complete your exit — making it highly flexible for developers needing cash flow during build phases.

Loan size depends on the Gross Development Value (GDV) — the projected value of the completed property or project.

Most lenders will finance:

• Up to 70% of GDV for experienced developers
• Up to 85% of total build costs or land + construction costs
• Loan terms of 12–36 months, depending on project scale

Example:
If your completed development is worth £1,000,000 (GDV), and the total build costs are £700,000, you might expect to borrow up to £700,000 (70% GDV), leaving £300,000 as equity or profit margin.

However, the actual amount depends on your experience, location, exit strategy, and project type (e.g., ground-up vs. conversion). Trinity Finance’s team can quickly assess how much you could borrow across multiple lenders to find the most competitive structure.

While both are short-term property funding tools, they serve different purposes:

If you’re building or converting, development finance is the right route — it matches your build costs.
If you simply need quick short-term funding for purchase or refinance (no build costs), a bridging loan is often more suitable.

Yes — although lenders usually prefer experienced developers, first-time developers can still secure funding. You’ll just need to demonstrate that your project is well-prepared and has professional support.
For first-timers, lenders place greater emphasis on:

• Strong professional team — builder, project manager, architect, QS, solicitor
• Clear exit plan — how you’ll repay once the project completes
• Adequate contingency — typically 10–15% of build costs
• Feasibility evidence — planning permission, comparable sales (GDV proof), realistic build costs

Trinity Finance regularly works with new developers. We help structure the application and present it to lenders in the most credible, lender-friendly way — increasing your approval chances dramatically.

Unlike traditional loans, development finance interest is usually not paid monthly — it’s rolled up (added to the loan balance) or retained (deducted upfront).
Here’s a breakdown of typical cost components:

• Interest: Usually between 6–12% per annum, depending on LTV, experience, and risk.
• Arrangement/facility fee: Typically 1–2% of the loan amount.
• Exit fee: May apply (often 1% of the loan or GDV), payable when the project is repaid.
• Valuation & legal fees: Paid at application stage for due diligence.
• Monitoring surveyor fees: Cover progress inspections during the build.

Trinity Finance ensures all fees are disclosed upfront. We compare multiple lenders to identify the most competitive total cost of borrowing — not just the headline interest rate.

Having complete and accurate documentation is key to a fast approval. You’ll typically need:

• Personal identification (passport, driving licence, proof of address)
• Company documents (if borrowing through a Ltd company or SPV)
• Detailed schedule of works (breakdown of each construction phase with costings)
• Planning permission or permitted development rights evidence
• Professional reports – architect drawings, QS report (if available), or builder’s quote
• Project appraisals – including build cost summary and GDV evidence
• Exit strategy evidence – sale comparables, mortgage in principle, or refinance plan

Trinity Finance’s brokers can assist with preparing and presenting these documents professionally, which helps secure quicker lender decisions and better terms.

Delays and overruns are common in development projects, so lenders expect contingency planning.
If your project runs over, there are generally three options:

• Request a term extension — some lenders will allow this if progress and exit strategy remain sound.
• Inject additional capital — either from personal funds or through a small top-up loan (if the lender agrees).
• Refinance — switch to another short-term facility or long-term mortgage once substantial value is created.

At Trinity Finance, we help clients monitor loan drawdowns, budgets, and progress. We can also step in mid-project to refinance or restructure if things change, ensuring you maintain control of your build.

The exit strategy is the most critical part of any development finance application. Lenders want to know exactly how and when they’ll be repaid.
Common exits include:

• Sale of the completed development — evidence via estate agent appraisals or comparables.
• Refinance — moving onto a long-term buy-to-let or commercial mortgage.
• Equity release — using another project or asset to repay the balance.

Lenders will test the feasibility of your exit. They may stress-test sale prices, rental yields, or mortgage availability to ensure the plan is realistic.
Trinity Finance supports you in crafting a credible, well-documented exit strategy that strengthens your application and secures better loan terms.