Property development finance

Are you looking for property development finance?

Whether you’ve got a heavy refurbishment project in mind, are looking to fund a new large scale property development project, or need help with building costs, property development finance could be the solution for you.

What is property development finance?

Property development finance is a type of business finance used for the purpose of funding a residential, commercial or mix-use property development. It's a fairly broad category that covers term loans, mortgages, bridging loans and even personal loans. It refers to the large-scale funding of significant building or renovation works.

The term ‘property finance’ (without the ‘development’) is a catch-all term that applies to a variety of finance options relating to the property sector. Bridging loans, development finance, commercial mortgages and auction finance are all types of property finance. 

Find property development finance here.

How does property development finance work?

Property development finance caters to the specific needs of property development projects. It can be used to fund a new residential housing project, workspace development or regeneration initiative.

The amount extended in this case usually depends on the final value of the project at the time of completion. Term lengths can run anywhere from a few months to many years depending on the type of funding, but the purpose for taking out that funding remains the same: to renovate, build, or develop a property.

Both private individuals and residential property developers can apply, as can property companies and building firms.

Property development finance comes in all shapes and sizes. Some lenders expect detailed business plans whereas others focus more intently on credit scores.

Types of property development finance

We help match eligible borrowers to our network of over 120 lenders offering the following financial options for property development projects:

• Refurbishment finance: This type of finance is designed to help cover construction costs, including the cost of labour and materials. It can also be used to fund internal decorating or structural changes. 

• Ground-up development loans: Ground-up property development finance is designed for larger projects and covers the price of the land and part of the construction cost. Property development finance is usually around 70-80% of the build cost. The developer must source funding for the remainder.

• Conversion finance: This finance type funds the conversion of a building into another type of building. It can also be used to extend or convert a section of a building.

• Short-term development finance: For short-term projects, a bridging loan could be the most suitable type of business finance to opt for. Bridging loans are designed for the short term until the loan can be paid back or a longer-term type of finance is secured. You may only need to repay the interest during the loan term length and will then have to repay the full amount once you’ve gained additional funding.

• Commercial property mortgage: Large renovations, on the other hand, could be funded using longer-term bridging finance or a commercial mortgage. Commercial property finance is usually repaid monthly over a long period, around 15-30 years.

• Bridging finance: A bridging loan might be more suitable if you want to buy, build, or renovate a new property but haven't sold an existing one. Or if you want to purchase a property and renovate it and then pay the full loan amount and interest upon the subsequent sale of the property.

• Auction finance: Auction finance can be used to purchase property or land at auction. Funds are usually released quite quickly and then repaid when additional funding is established.

• Buy-to-let mortgage: If you want to borrow money to buy, build, or renovate property through a limited company with the intention to rent the premises out, a buy-to-let mortgage may be most suitable.

Why should you use Funding Options by Tide to help you find property development finance?

• A strong track record: We’re well known for our exceptional work in this area. We’ve helped over 17,000 customers access more than £800M in funding, including property development funding. 

• A wide network of lenders: We work with over 120 lenders offering between £1,000 and £20M.

• Competitive rates: We help match eligible borrowers to lenders. Since we work with so many lenders, we’re able to carefully select the most suitable options for each company.

• Expert support: Our team of experts are ready and waiting to provide comforting support, helping businesses navigate finance with ease.

As Bright Green Homes put it:

"“Funding Options spent some time trying to understand what it is we do and why we needed this funding. That’s something that banks don’t do these days — talk.”

Simmons Bar case study

Nick and Jason needed funding to expand their cocktail bar chain and launch a new bar in Soho, the Simmons Bar, but their existing bank only offered half of the £50,000 needed to make the venture a success. So, they turned to us.

We helped them leverage the reputation of their exceptionally well run (and profitable!) bars across London to secure the full amount from RateSetter. With the funding in hand, they were pleased to be able to stick to their tight refurbishment deadlines. They also liked that the lender we found didn’t charge for early repayment and even offered to allow them to draw additional funds in future.

Join Nick and Jason by finding property development finance with us.

What does the process look like?

The process of applying for a property development loan generally follows these steps:

1. Decide how you want to manage your project.

2. Create a project plan.

3. Decide what loan type you’d like (e.g. a bridging loan or commercial mortgage).

4. Decide which lender you’d like to use, pay close attention to each lender’s terms, such as the interest rates and repayment dates.

5. Gather your documentation together (e.g. an exit plan, cash flow projections, a business plan).

6. Carefully review the contractual terms set out in the lender’s terms and conditions.

7. Complete the application. Depending on the lender, you may have to pay an application fee.

8. Wait for approval or rejection.

9. If you’re approved and you’re happy with the terms, accept them and receive your funds.

10. Repay the loan, either slowly on a monthly basis or all at once at the end of the term length depending on your agreement with the lender. 

What can I use development finance for?

You can use property development finance for a wide range of purposes, including:

• Purchasing land or property on which to develop

• Cost of labour

• Cost of material

• Paying for refurbishments

• Indoor decorating

• Converting one property into another, for example, converting a restaurant into buy-to-let residential flats

• Structural changes

• Legal fees

How much could I borrow?

The loan amount you are eligible for will vary by lender, however, we help match eligible borrowers to lenders offering between £1,000 and £20M.

In general, you may struggle to find funding for more than 75-90% of the value of the property you are securing the loan against.

Tips for improving your application

• Research: Before committing to a property development project, consider conducting research into the local market you're looking to purchase in.

• Strategy: Among other factors, having a well-thought-out investment strategy in place when you approach a lender can help you get a good rate.

• Advice: You may be considering setting up a limited company – if so, you should seek professional tax and legal advice.

• Broker: Using a broker can help you find the best rates and the most suitable lender.

• Documentation: Supplying the lender with all the relevant documentation (such as cash flow projections and an exit plan) can help improve loan approval speeds.

Property development finance FAQs

How do I apply?

Just head to our get a quote page and fill in the information requested. Based on the information provided, we’ll let you know if you’re eligible without affecting your credit score. If you are eligible, we’ll show you the lenders we’ve matched you with, how much they’re offering, and under which terms.

At this point, you can choose to walk away. Our service is completely commitment and fee-free.

If, however, you do choose to go ahead with one of the lenders we’ve matched you to, you’ll likely need to submit information about your company and the project, cash flow projections, and an exit plan. 

Get expert support with Funding Options by Tide

Find property development finance with us. Don’t worry if you don’t know exactly what type of finance you want, our expert support team can help you understand your options. Just click the link below and submit your details to gain access to our team of experts.

Find property development finance.

Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.

It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.

Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.