Property development finance
What is development finance?
Property development finance is used when you need funding for building projects, such as new construction, conversions, redevelopments, and light or heavy refurbishment. It can be used for residential, commercial and mixed-use schemes.
The borrowing is usually repaid from the sale of the finished properties. If you plan to keep some of them, it may be possible to refinance onto a longer-term loan instead. Funding from £25,000 to £30 million may be available, depending on the project.
Get in touch.
Complete the contact form, call us or email us to discuss your circumstances and requirements. A member of our team will contact you.
Projects we can look at
New construction
Ground-up residential or commercial schemes.
Conversion
Changing the use of a building, such as office to residential or a barn conversion.
Refurbishment
Light and heavy works that add value.
Mixed-use and business property
Schemes that combine residential and commercial space.
How development finance works
Funds are released in stages, called drawdowns. A monitoring surveyor typically checks progress, and each stage is released as the work is completed.
A standard loan
The full amount is paid out once the loan is approved.
Development finance
Funds are released in stages, as each progress inspection is passed.
Interest is normally charged on the amount drawn, not on the whole facility, and the loan is repaid when the project is sold or refinanced. Development finance generally needs a larger contribution from you than a residential mortgage.
What lenders look at
The site and the costs
The location, the planning status and the cost of the build.
The finished value (GDV)
The expected value of the finished scheme, known as the gross development value.
Your experience and team
Your track record, and the builder and contractors you plan to use.
Your contribution
How much of your own money is going into the project.
Your exit
Selling the finished units, or refinancing onto a long-term loan.
How it works with TIC Finance
Upon receiving an enquiry, TIC Finance will assess it for suitability and whether it is something we can provide ourselves.
Tell us about your project
The site, the type of scheme, your budget and how you plan to repay.
Indicative terms
We assess your enquiry and, where we can, come back with initial indicative terms.
Agreement in principle
If the terms look right, we set out the finance and the charges, and what they are subject to.
Valuation and surveyor visit
An instructed surveyor visits the site, checks the details and values the project.
Underwriting
The application is underwritten and the exact terms, including all costs, are confirmed.
Legal work and funding
Solicitors handle the documents, and the funds are released in stages as the build progresses.
If we cannot provide the finance directly
If TIC Finance is not able to provide the finance directly, we will respond to let you know.
We will ask for your permission to approach our network on your behalf.
Associates, lenders and organisations across the UK who may be able to provide suitable options.
If applicable, we will support and help you throughout the process, should you need it.
Planning your project
If you are new to development, it helps to think about these before you apply:
Read our guide to getting started in property development.
Is development finance right for you?
Development finance suits developers with a defined scheme and a clear route to repay. Your project may be better suited to a different structure, such as a joint venture, or to a bridging loan for the purchase stage.
Whether it is right for you depends on your circumstances. You should be well informed about the options available to you, what the costs are and what the consequences may be. We recommend that you seek independent legal and financial advice to know whether it is right for your circumstances.
Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
Development finance for business and investment purposes is not regulated by the Financial Conduct Authority. Loans secured on a home you or your family live in may be regulated.
FAQs
How much can I borrow?
We can lend or arrange funding from £25,000 up to £30 million, depending on the project. The amount for your scheme depends on its cost, its value, and your experience.
How much deposit or equity do I need?
It varies with the type of project, your financial position and the overall risk. Development finance generally needs a larger contribution from you than a residential mortgage, and we will explain what is typical for your scheme.
Can I use development finance on a property I already own?
Yes. Many projects involve renovating, extending or redeveloping a property the borrower already owns.
What is a drawdown?
A drawdown is a release of funds at an agreed stage of the build. This keeps borrowing in line with progress and reduces cost and risk.
Are bridging loans ever part of a development?
Often. A bridging loan can fund the site purchase quickly, with development finance following for the build. See our page on bridging loans.