Property Development Finance: Ground-Up, Mezzanine and Development Exit Funding
Facilities from £250,000 to £10m+ for new-build schemes, conversions and commercial-to-residential projects. Up to 90% loan to cost and 70% loan to GDV, with land and build costs funded in staged drawdowns.
Property development finance is a short-term facility that funds the purchase of a site and the cost of building on it, released in stages as works progress and repaid from sales or refinance when the units are complete. We arrange it across the UK from a panel of 50+ senior, stretch-senior and mezzanine lenders, with no upfront broker fees.
On this page
Property development finance: the short version
- What it funds: the site purchase (or refinance of a site you own) plus 100% of build costs, professional fees and interest, drawn in stages against a monitoring surveyor's certificates.
- How much: £250,000 to £10m+. Senior debt up to 65–70% of GDV and 85–90% of total cost; stretch-senior and mezzanine can take total debt to 90% of cost and 75% of GDV.
- What it costs: senior rates from 0.65% a month (c. 7.8% a year), rolled up into the facility; arrangement fee 1–2%; exit fee 1–2% of the loan or GDV; monitoring surveyor and valuation at cost. No upfront broker fees.
- How long: 6 to 30 months to cover build and a sales or refinance period; most SME schemes run 12 to 18 months.
- Who qualifies: individuals, SPVs and companies with full planning, a costed build programme and a credible exit. First-time developers are considered with an experienced contractor or project manager.
Ground-up, mezzanine and development exit: which facility fits
Development funding is a stack. Most schemes use one senior facility; larger or thinner-equity schemes layer a mezzanine loan behind it; and almost every scheme should plan for a development exit bridge at practical completion.
Ground-up development loans
The core facility for new-build houses, flats and commercial units. Funds a land advance on day one (typically 50–65% of site value) and 100% of build costs in arrears, up to 65–70% LTGDV and 85% LTC. From 0.65% a month.
Mezzanine finance
Sits behind the senior lender to reduce your equity. Takes total borrowing to 90% of cost and up to 75% of GDV. Priced from 1.25% a month plus a fee or profit share. Usually from £250,000 and only on schemes with 20%+ profit on cost.
Stretch senior
One lender provides the equivalent of senior plus mezzanine, typically 85–90% LTC and 70–75% LTGDV, at a blended rate from 0.85% a month. Simpler legals and one monitoring surveyor, but a narrower lender pool.
Development exit bridging →
Refinances the development loan once units are complete, at a lower rate (from 0.61% a month), releases equity early and gives you 6 to 18 months to sell without pressure from the original facility's expiry date.
Land bridging and planning gain
Short-term funding to secure a site while planning is obtained or enhanced, then refinanced into a development facility on consent. Up to 65% of current value; see land bridging loans.
Commercial-to-residential and PD schemes
Office, retail and agricultural buildings converted under permitted development or full planning. Funded like ground-up on a lighter monitoring regime; see permitted development finance.
Development finance terms at a glance
| Parameter | Senior development loan | Stretch senior | Mezzanine (behind senior) |
|---|---|---|---|
| Facility size | £250,000 to £10m+ | £500,000 to £10m+ | £250,000 to £5m |
| Loan to cost (LTC) | Up to 85% | Up to 90% | Up to 90% combined |
| Loan to GDV (LTGDV) | Up to 65–70% | Up to 70–75% | Up to 75% combined |
| Day-one land advance | 50–65% of site value | Up to 70% of site value | Tops up land equity |
| Build costs funded | 100%, in arrears, monthly | 100%, in arrears, monthly | n/a |
| Interest (indicative) | From 0.65% pcm, rolled up | From 0.85% pcm, rolled up | From 1.25% pcm, rolled up |
| Arrangement fee | 1–2% of facility | 1.5–2% | 2–3% or profit share |
| Exit fee | 1–2% of loan or 1% of GDV | 1–2% of GDV | Often nil; priced in rate |
| Term | 6–30 months | 9–30 months | Matches senior |
| Minimum profit on cost | 15–20% | 20% | 20–25% |
| Security | First charge, debenture, PGs (typically 20–25% of facility), collateral warranties | As senior | Second charge, intercreditor deed, PGs |
Indicative, based on our lender panel in November 2026. Pricing depends on location, scheme size, experience, pre-sales and the contractor. Figures exclude your own professional and legal costs.
How a development facility is structured and drawn
Day-one land advance
On completion the lender advances a percentage of the site value (or purchase price, if lower). You contribute the balance as equity, plus the arrangement fee, valuation and legal costs. Interest and fees for the whole term are usually retained within the facility, so nothing is paid monthly.
Build drawdowns in arrears
Each month your contractor's valuation is certified by the lender's monitoring surveyor (IMS). The lender then releases that month's costs, typically within 5 to 10 working days. You fund the first month's works from cash flow, and the lender reimburses from month two.
Contingency and cost overruns
Lenders expect a 5–10% contingency inside the build budget. Overruns beyond it are your cost first; if sales values have risen, some lenders will re-size the facility against an updated valuation.
Practical completion and exit
At PC the units are signed off, warranties issued and the sales or refinance period begins. Sale proceeds repay the loan unit by unit, usually with a minimum release price per unit. Or a development exit bridge refinances the whole facility at a lower rate.
LTC is the facility as a percentage of total project cost (land + build + fees + interest). LTGDV is the facility as a percentage of the end value. Lenders cap both, and the lower cap bites. On a thin-margin scheme the GDV cap limits you; on a high-margin scheme the cost cap does. The appraisal calculator above shows which one is constraining your project.
Four houses on a consented site: senior vs stretch senior
| Scheme | Senior only (85% LTC / 65% LTGDV) | Stretch senior (90% LTC / 70% LTGDV) |
|---|---|---|
| Site purchase | £600,000 | £600,000 |
| Build cost incl. fees and contingency | £900,000 | £900,000 |
| Total cost (before finance) | £1,500,000 | £1,500,000 |
| GDV (4 x £550,000) | £2,200,000 | £2,200,000 |
| Maximum facility | £1,275,000 (85% LTC; 58% LTGDV) | £1,350,000 (90% LTC; 61% LTGDV) |
| Of which land advance day one | £375,000 (62.5% of site) | £450,000 (75% of site) |
| Of which build and finance costs | £900,000 in arrears | £900,000 in arrears |
| Developer equity on day one | £225,000 + fees | £150,000 + fees |
| Indicative rate | 0.70% pcm rolled up | 0.90% pcm rolled up |
| Finance cost over 15 months (approx.) | £105,000 interest + £25,500 fees | £135,000 interest + £40,500 fees |
| Profit on cost after finance | £570,000 (35%) | £525,000 (31%) |
Interest is approximate: it accrues on the drawn balance, which rises through the build, so the real figure is lower than a flat calculation. The stretch route costs c. £45,000 more but needs £75,000 less equity, which is often the difference between doing one scheme a year and two.
SME builders, residential developers and conversion contractors
SME house builders
Two to twenty units on consented sites. Senior facilities with a land advance and monthly drawdowns, structured around your contractor's programme, with pre-sales not required.
Residential developers and investors
Flats and houses for sale or to hold. Build-to-rent schemes can exit onto a portfolio or term facility rather than sales, and we structure the development loan with that refinance in mind.
Commercial conversion contractors
Office-to-residential, retail-to-residential and agricultural conversions under permitted development or full planning. Lighter monitoring, faster drawdowns, and funding for the change-of-use works.
First-time developers
Considered by a smaller panel, usually at 60–65% LTGDV, where you have an experienced main contractor on a JCT contract, a project manager or a partner with a track record, and a scheme of modest scale.
Development finance criteria and the information pack
Development lenders underwrite the scheme before the borrower. A well-prepared pack can move a case from enquiry to credit-backed terms in a week; a thin one adds a month.
- Planning: full or outline-with-reserved-matters consent, with conditions that can be discharged before start on site. Section 106 and CIL liabilities costed into the appraisal.
- Appraisal: land cost, build cost per square foot with a contingency of 5–10%, professional fees, finance costs, and GDV supported by comparable evidence. Profit on cost of at least 15–20%.
- Build programme and contractor: a month-by-month programme, a fixed-price or JCT contract with a contractor who has delivered similar schemes, and warranties (NHBC, Premier, LABC or equivalent).
- Experience: a CV of completed schemes for you or your team. Where experience is light, lenders look to the contractor, the project manager and a lower leverage point.
- Exit: sales evidence from local agents, or indicative refinance terms for build-to-rent. Lenders will set minimum release prices per unit.
- Borrower and security: an SPV is standard. Personal guarantees of 20–25% of the facility, a debenture over the SPV, a first legal charge, and collateral warranties from the professional team.
Have a site and an appraisal?
Send us the appraisal and planning reference. We will tell you the realistic leverage, the likely lenders and the equity you need, usually within the day.
From appraisal to first drawdown: typically 4 to 8 weeks
Appraisal review and indicative terms
We review the appraisal, planning and your experience and come back with indicative terms from the two or three best-fit lenders: leverage, rate, fees and conditions.
Credit-backed terms and instruction
You choose a lender, pay the valuation and IMS fees, and the lender instructs a RICS development valuation and the monitoring surveyor's initial report on costs and programme.
Valuation, IMS report and legals
The valuer confirms site value and GDV; the IMS confirms the build cost and contingency are adequate. Solicitors deal with title, planning conditions, warranties and the facility agreement.
Completion and land drawdown
The facility completes, the land advance is released, and the first build drawdown follows the first IMS certificate, usually a month after start on site.
Where the site is already owned and planning is in place, the timetable compresses to 3 to 5 weeks. Where you need to complete a land purchase before the development facility is ready, a land bridging loan or fast bridging loan secures the site first.
Repaying the facility, and why most schemes should plan a development exit bridge
Development loans are expensive and their terms are tight. Once the units are complete, the risk has fallen, so the price of money should too. Three exits cover almost every scheme:
Unit sales
Each sale repays the lender its minimum release price, with the surplus to you once the loan is cleared. Works well when sales are agreed before practical completion.
Development exit bridge →
Refinances the completed scheme at from 0.61% a month, extends the sales period by 6 to 18 months, and can release 10–20% of equity on day one so you can secure the next site while this one sells.
Term refinance
Buy-to-let, portfolio or commercial investment mortgage once units are let. We line up the refinance lender during the build so the exit is ready at PC.
For how the whole bridging and development market fits together, including interest options and fee structures, read the complete guide to bridging loans.
Property development finance FAQs
What is the difference between development finance and a development bridging loan?
Development finance funds build costs in monitored stages against a monitoring surveyor's certificates, with a land advance on day one, and is sized on loan to cost and loan to GDV. A development bridging loan is a simpler bridging facility secured on the site or a part-built scheme, usually funding lighter works in one or two tranches without full monitoring. Bridging suits small conversions and refurbishments; development finance suits new-build and structural schemes above about £250,000 of works.
How much deposit do I need for property development finance?
With senior debt at 85% loan to cost you contribute about 15% of total cost plus fees, most of it as equity in the land. At 90% LTC via stretch senior or mezzanine, around 10% plus fees. On a £1.5m scheme that is roughly £150,000 to £225,000 of cash or existing land equity. Lenders will not fund 100% of cost without additional security.
Can I get development finance as a first-time developer?
Yes, with a smaller panel and at lower leverage, typically 60–65% of GDV. Lenders want to see an experienced main contractor on a fixed-price contract, a project manager or JV partner with completed schemes, a modest first project, and a contingency of at least 10%. Delivering one scheme on time opens up the full market for the second.
What does loan to GDV mean and why does it matter?
Loan to gross development value is the total facility, including rolled-up interest and fees, as a percentage of the scheme's end value. Senior lenders cap it at 65–70% because it is their cushion if the scheme has to be sold part-built or values fall. On high-margin schemes the LTGDV cap rarely bites; on tighter schemes it is usually the number that limits how much you can borrow.
How are build costs released?
In arrears, usually monthly. Your contractor submits a valuation of works done, the lender's monitoring surveyor inspects and certifies it, and the lender releases that amount, normally within 5 to 10 working days. You fund the first month's works yourself and are reimbursed from month two, so a cash-flow buffer of one to two months of build cost is needed.
What happens if the scheme runs over time or budget?
Tell the lender early. Most facilities include a 5–10% contingency and lenders will usually grant a short extension at a fee if the scheme is progressing. Where values have risen, some will re-size the loan against an updated valuation. If the term is close to expiry at completion, a development exit bridge refinances the facility and resets the clock at a lower rate.
Related development and bridging products.
Each product page has its own calculator, criteria and rates.
Got a site? Let's size the facility.
Send the appraisal and planning reference to a development specialist. We compare senior, stretch and mezzanine options across 50+ lenders and come back with indicative terms, usually the same day.
- Development desk
- 01451 514 563 Mon–Fri, 8:30am–6:00pm
- Enquiries
- enquiries@auracapital.co.uk
- Office
- Palace Gardens Terrace, London W8
Development finance is secured on the site and the completed units; the property may be repossessed if the facility is not repaid at the end of the term. All figures on this page are indicative, based on our lender panel in November 2026, and subject to appraisal, RICS valuation, monitoring surveyor reports, legal due diligence and lender underwriting. Interest on development facilities accrues on the drawn balance and is normally retained within the facility. Aura Capital is a trading name of Chammosair Limited, registered in England & Wales, company no. 15786496. Aura Capital is not authorised or regulated by the Financial Conduct Authority and does not arrange regulated loans or give financial advice. Development finance to companies and for investment purposes is not regulated by the FCA.