Development Finance Lenders | Compare Rates and Quotes

15-May-2023
15-May-2023 10:30
in Development
by Sam Hodgson
Development Finance Lenders

Looking to compare development finance lenders for your project?

As development finance experts, we know it can be an incredibly difficult task.

Largely because the lenders out there specialise in different areas of property development. 

Whether it's a commercial development, a build-to-let, a refurb, or a ground-up self build project, the best lender for you will likely be different each time - especially when you factor in all the intricacies and unique details of your specific project. 

The solution? 

You can also apply online and get a decision in principle in a matter of hours.

Simply put in your project's details: 

  • Development type
  • Property type(s)
  • Purchase costs (stamp duty, legal fees, surveys etc.)
  • Build costs 
  • GDV (gross development value)
  • Exit strategy etc.

And get a list of quotes from our panel of lenders. 

You can then filter your quotes.

For example, filter by the lowest interest rates and fees, and then compare this to the deposit requirements and loan value for each product. 

Ensuring you're getting the right quote at the best value for your specific development project.

Try it out for free below:

Get Development Finance Quotes »

And throughout the rest of this guide, we will explore different types of lenders offering development finance loans, how to match your circumstances to the right provider, and how a broker can assist in speeding up the process.

See similar: What is Development Finance?

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Types of Development Finance Lenders


How to Choose the Best Development Finance Lender 


Which Development Finance Lenders Should I Apply to?


How Much Can I Borrow From Development Finance Lenders?


How Can a Broker Assist In Finding Development Finance?


Need Help Finding the Right Development Finance Lender?


FAQs  

Types of Development Finance Lenders

Who provides development finance? There are many different types of development finance providers. To make an informed decision and to ensure everything goes smoothly, you must first consider your circumstances and requirements.

Here are the most common types of development finance lenders:

High Street Lenders

High Street Lenders are traditional banks and building societies that offer development finance loans. While they offer competitive interest rates, securing funding can be challenging due to their strict lending criteria.

High street lenders typically offer loans up to 60% of the Gross Development Value (GDV) with a loan term of up to 36 months – but this may vary depending on the bank.

Challenger Banks

Challenger Banks, on the other hand, are relatively new entrants to the market and tend to be more flexible in their lending criteria.

They often offer up to 75% of the GDV and often have a faster decision-making process than high-street lenders.

Challenger banks also offer competitive interest rates but could be higher than other options depending on your project and the lender.

Specialist Lenders

Specialist Lenders cater to more complex development projects, such as brownfield sites, conversions, and refurbishments.

They often offer up to 80% of your GDV and can provide more tailored lending solutions. However, specialist lenders can be more expensive than high-street lenders and challenger banks in some cases.

Private lenders

Private Lenders offer development finance to borrowers who need access to non-traditional lending options. Typically high-net-worth individuals or companies that lend their own money, private lenders can provide a more personalized approach to lending. 

Development loan case study

How to Choose the Best Development Finance Lender

Selecting the best development finance lender to meet your specific needs can be daunting, but with the proper guidance and support, the process can become more manageable.

When considering a lender, there are several critical factors that you should take into account:

  • Interest Rates: Interest rates can vary considerably when comparing development finance providers.

    Shopping around for favourable rates is advisable to ensure you obtain the most competitive rate possible. Remember to factor in other fees, mot just your interest rate, to get an idea of the total cost of each loan.

  • Loan-to-GDV Ratio: The loan-to-GDV ratio measures the loan amount compared to the property's value – and with development finance, lenders will value with respect to its GDV (Gross development value), which is the projected value of your completed project.

    Selecting a lender with a loan-to-value ratio that aligns with your requirements is vital – as, depending on the scale of the development project, you may need a smaller or larger loan, or you may be able to release equity, or put down a larger deposit for the loan.

  • Fees and Charges: Various fees and charges are associated with development finance – this can become an expensive endeavour if the scale and scope of a property project are expansive – and these charges can vary significantly between lenders.

    Before the outset, it is a good idea to comprehend all the expenses associated with the loan before agreeing to any terms.
  • Lending Criteria: Lending criteria vary from lender to lender, and understanding the criteria required to obtain financing from a lender before applying is an important step – some may have more stringent requirements, and others may not.

Development Loan Example Case

Which Development Finance Lenders Should I Apply to?

The UK development finance market is competitive – different types of development finance providers operate throughout the country, and some are specialist lenders and others are accessible high-street banks.

You should generally apply to as many lenders as you can for an initial quote and to get an idea if they're the right lender for you. You don't have to go through with the entire application - just enough to get an understanding of the quote you'll get and whether it's competitive for you.

Development Finance Calculator

The best UK lender for you will depend on which is best suited to your property development project.

It's important to note that the best development finance lender for you will depend on your specific requirements and circumstances. It's always recommended to do your research and compare different lenders before making a decision. Don't waste time and effort applying to the wrong lenders.

At Clifton Private Finance, we can help you make the right choice and secure the financing you need to make your project a success. 

Get Development Finance Quotes »

And our short video below explains Property Development Finance in more detail:

How Much Can I Borrow From Development Finance Lenders?

In development finance, the estimated open-market value of your finished property or development, along with your development experience and financial situation, are all aspects a lender will consider closely when determining how much you’d be able to borrow.

The majority of development finance providers will grant development loans up to 65% of the Gross Development Value (GDV) if they are satisfied – this can go higher, but it will depend on the scale and size of the project.

When it comes to development finance, you’ll be able to access the best rates available if you have a good track record of successful property development projects – but if you’re a new developer, there are still options available to you to make the process smoother, and find the right lender.

Our Development Finance Case Studies

Development Loan to Refinance New Build House
Development Loan to Refinance New Build House
Area
Daventry
Capital Raised
£1.6m
Fast Bridging Loan For Complex Development Project
Fast Bridging Loan For Complex Development Project
Area
Gloucester
Capital Raised
£1M
Case Study: Securing £1.25m Buy to Let Mortgage for Development Finance Exit
£1.25m Buy To Let Mortgage Secured for Development Finance Exit
Area
Hatfield
Capital Raised
£1.25M
Property Development Bridge Loan For New Build Dream Home
Property Development Bridge Loan For New Build Dream Home
Area
Stevenage
Capital Raised
£90k
Bridging Loan to Secure Property Requiring Planning Permission, Split Titles and Refurbishment Before Refinancing
Bridging Loan to Secure Property Requiring Planning Permission, Split Titles and Refurbishment Before Refinancing
Area
Scotland
Capital Raised
£910k
€3m Bridging Loan on Ibiza Residential Property to Fund London Development Project
€3m Bridging Loan on Ibiza Residential Property to Fund London Development Project
Area
Ibiza
Capital Raised
€3m

How Can a Broker Assist In Finding Development Finance?

Using a broker can make a world of difference to your development project.

A broker can help you navigate the complex lending market, find the right lender, and negotiate the most favourable deal possible.

We can provide a full-service solution, from initial enquiry through to completion.

Our team of experienced advisors will work with you to ensure that you have the funding you need to complete your development project through specialist, or high-street lenders.

At Clifton Private Finance, we have access to an extensive range of lenders, and our brokers have an in-depth knowledge of the development finance market and the lenders that operate within it.

We work with lenders that can provide you with the funds you need, structured around your requirements, at competitive market rates.

We work closely with you to understand your specific requirements, such as the loan amount, loan term, and interest rate. We can advise you on whether development finance is a viable and affordable option, or if there are alternative ways of financing your property project.

Read blog: London Airspace Development - How to Secure Finance

Book Consultation »

Need Help Finding the Right Development Finance Lender?

We can help if you’re in need of a development loan and you’re looking for the right lender for the job – here at Clifton Private Finance, we have the expertise and knowledge of the development finance market to find lenders that can meet your requirements.

We take a personalized approach to finding the right lender for your circumstances, and our whole-of-market access ensures that you get the most competitive rates.

When it comes to significant financial decisions, seeking the help of a specialist finance broker is always recommended. Our team can ensure you receive finance at an affordable and favourable rate, suited to you.

Contact us today at 0117 959 5094 to learn how we can assist you, or book a consultation below.

Book Consultation »

FAQs

Which UK Banks Offer Development Finance?

The majority of UK banks offer property development finance, including NatWest, Barclays, HSBC, and Santander – to name some of the most popular high-street banks. Most of these banks offer similar products for both residential and commercial property, senior debt, and mezzanine finance.

Can I Get Development Finance with No Experience?

If you’re a first time developer it can be challenging to get development finance without prior experience – lenders will often want to see a successful example of previous development property projects. It is not impossible, however, and there are ways in which you can overcome the high-risk associated with property development loans.

Can You Get Up to 100% of Development Costs with Development Finance?

Development finance is a high-risk form of lending, and lenders are therefore apprehensive about providing funding above the GDV of your property. If you want to be able to cover 100% of development costs for your property project, lenders will require that a borrower has equity, or cash reserves, to invest – or a borrower can put up additional collateral to provide a high level of financing.