Vital financing arranged for all land and property development works
Property Development Finance
Create the funding solution you need with our online development finance calculator. We provide expert finance to property developers in any sector in the UK.
Whether you’re a seasoned developer or just starting your first renovation, we offer a variety of top-rated property development funding options across the UK to suit your needs. Our clients range from newbies to professionals, all looking for the right financing to achieve their goals and maximise profits.
Flexible and Affordable Loans
Whether it’s an ambitious new build or a simple refurbishment, securing the right funding can be the key to success. We specialise in finding and comparing the best loan options for your project with competitive rates and no upfront fees or credit checks. Use our online calculator to compare different options and find the best deal. Have questions? We’re open till late and offer online appointments to help you.
Let our loan search tool compare rates for development finance against high-street banks and other institutions:
Development finance repayment
The Donkey Finance property development funding calculator is a unique tool that allows you to determine the most suitable funding solutions for your specific project, taking into account your individual borrowing needs.
Whether you are considering a residential, commercial, or semi-commercial property development, we have all the necessary resources to ensure your project is feasible and successful and delivers the highest achievable ROI.
Development finance lending criteria
The criteria for development funding will depend on the project itself and the actual lender. In order to find the most suitable deal, we will assess each application on its individual merits before searching our extensive panel of lenders to find an appropriate solution.
- Loan terms typically extend to 24 months.
- A minimum loan size of £30,000 usually applies, although there is no ceiling limit on funding.
- Typically, annual interest rates hover around 7%. Because this is added to the loan amount, you usually pay the interest at the end of the term rather than monthly.
- The lender arrangement fee is between 1 and 2% of the loan size. Sometimes this fee can be added to the loan balance.
- Exit fees are not always necessary, although if the LTV ratio is unusually high, an exit fee may be applicable.
- Donkey Finance can secure funding for up to 75% of the land purchase price and 100% of the actual build costs.
- An appointed QS/monitoring surveyor will assess the timing of drawdowns and release funds to match your cash flow requirements.
- Before development begins, the lender will visit and inspect the site and take a detailed look at your plans and costs in order to ensure your proposal is realistically profitable. The valuer will also evaluate and ascertain the project’s gross development value (GDV) upon completion.
We provide development finance for projects of all shapes and sizes
Perhaps you are looking for funds in order to convert a disused office block into mixed-use or semi-commercial premises, such as a shopping complex with residential accommodation. Perhaps your goals are more modest and you just need a small development loan to finance the renovation and conversion of an old barn into a modern farmhouse equipped with running water and central heating.
Whatever your needs and wherever you are based, let Donkey Finance source an appropriate development funding solution on your behalf, with flexible borrowing terms and the most competitive rates of interest in the UK.
How is development finance calculated?
Several factors influence development financing calculations, including overall project cost, property or land valuation, developer expertise, and lender risk assessment. Lenders typically examine loan-to-cost (LTC) and loan-to-value (LTV) ratios when deciding how much development funding to issue. The LTC ratio shows the proportion of the project cost that the lender is prepared to finance, whereas the LTV ratio shows the percentage of the property’s worth that the lender would lend against. Interest rates, payback terms, and other financial arrangements are also considered in the computation, depending on the parameters of the development financing agreement.
Building residential property
Typically, this refers to the construction or renovation of residential properties such as houses or apartments. If you are unable to secure the necessary funds from a bank, a private property development loan could be an effective solution. The market value of the property protects the loan, so the ability to make monthly payments is not taken into account.
Self-Build Loans
Are you thinking about building a house for yourself? To do this, you’ll need self-build credit, which works like a regular mortgage. You will have to prove that you can pay the monthly fees.
Commercial and semi-commercial development
We use this type of financing to build commercial properties like offices, stores, or industrial units. The value of the property, excluding the business’s goodwill, secures the loan.
Property renovation and refurbishment
These initiatives include transforming ancient or dilapidated structures into habitable places. The Financial Conduct Authority will license a loan if you intend to live there in the future. There is no need for FCA regulation if you intend to sell later.
Glossary of term
- Rates: The interest rates applied to loans.
- Calculator: A tool to estimate your loan costs and compare different options.
- Planning Permission: Legal approval to proceed with a development.
- ROI (Return on Investment): The percentage return on an investment.
- Title: Legal ownership of land.
We make property development funding straightforward, so you can focus on making your project a success. Use our online calculator to compare your options, schedule an appointment, and begin your project right away!
How do I finance real estate development?
There are several ways to access the funds needed to finance real estate development. In most cases, development finance is available for between 75% and 90% of the total value of the project. Typically, existing property or combined assets provide sufficient security in all instances.
Specialist development finance provides an accessible, flexible, and affordable alternative to more conventional loan and funding channels. If the applicant has a confirmed exit strategy in place, they can also use bridging loans to finance real estate development. The proviso with bridging loans is the capacity to repay the loan in full within a matter of weeks or months. If a longer repayment period is required, development finance or alternative secured loan options may be preferable.
The size and nature of the project, as well as the applicant’s financial situation, determine eligibility for development finance. Credit checks and proof of income may not be required if the applicant can provide sufficient security.
If considering development finance for a real estate project, be sure to compare the deals from specialist lenders across the UK before making your final decision.
How do I finance a property development project?
Depending on its size, nature, and urgency, there are various ways to finance a property development project. In the case of larger and longer-term property development projects, specialist development finance solutions should be considered. We offer development finance loans as secured loans with flexible repayment periods and competitive overall borrowing costs.
A bridging loan, often accessible within a matter of days, can cover shorter-term requirements. Urgent repairs, alterations, business modifications, and general business expenses represent ideal applications for commercial bridge loans. Traditional business loans and mortgage products may also be considered, but they typically take considerably longer to organise and obtain.
Peer-to-peer lending, crowd funding, and other options exist for financing a development project, though they can be time-consuming to organise. Accessing the best property development finance deals on the market means setting your sights beyond the High Street.
Contact a member of our customer support team today to discuss your requirements in more detail.
How do I finance a property development business?
Financing a property development business is a process similar to that of funding any other business. When starting the business, one can consider various funding options such as personal loans, business loans, secured loans, government grants, and peer-to-peer funding.
You could also extend the value of your current mortgage or borrow the funds you need against the value of your property. Once up and running, a property development business can access development finance to fund immediate and ongoing projects. Generally, lenders offer development finance loans as secured loans, leveraging the borrower’s property as collateral.
You can borrow development finance to cover approximately 75% to 90% of the project’s total cost, with repayment options ranging from 1 to 30 years. You can use bridging loans to cover more immediate and urgent expenses, repaying them in a single lump sum a few weeks or months later.
Your current position, your objectives, and your budget will determine your ideal funding option. We can help you locate and access the ideal funding solution for your property development business.
Why choose us?
When you apply for property development finance through us, you can rest assured that you are working with the industry’s leading experts. As well as being able to provide a popular range of finance products from the entire lending market, we offer the lowest rates available with no upfront application fees, and we can even fund up to 100% of the building costs of most projects, as long as you have sufficient collateral.
We can also help with land purchases while providing funding options starting at £20,000 with no upper limit on borrowing, as long as the project is commercially viable and the applicant already owns the development land without any restrictions.
Why compare development finance options?
Donkey provides customers with access to the widest possible range of development loans from leading lenders nationwide. We make it quick and simple to compare development finance options for all purposes, securing the best deals with the lowest rates of interest and minimal overall borrowing costs.
Simply contact a member of the Donkey Finance team, and we’ll take care of the entire application process on your behalf. We’ll compare development loans from the UK’s most established and capable specialist lenders in order to pinpoint the perfect development loan to suit your requirements and budget.
This is my first ever development project; is it still possible to arrange funding?
Yes, it is. We have several funding options available for developers at all levels of experience, even if this is the first project you have been involved with.
However, if you are new to building and renovating properties, our lenders will want to know that you are working with a skilled team who can provide the advice and support you require in order to see the project through to completion.
First-time developers will also be required to work with a reputable building contractor who can provide a fixed-price contract as a means of ensuring your project does not run over budget.
If you need any assistance in this area, Donkey Finance can even recommend a team of professionals who will work with you to get the job done on time and within the projected funding limits in order to ensure that the application and the project itself are a success.
My credit rating is less than perfect; will this be a major problem?
If you have a poor or somewhat problematic credit history and are trying to secure funds for property development, there will always be one or two lenders who will refuse to invest in your project.
However, most property development finance solutions rely on the project’s strength, as well as the professionals you surround yourself with, to guarantee that the work is both realistically achievable and consequently profitable.
If you have struggled to get financing elsewhere, please talk to our team, and we will try to figure out a workable solution on your behalf.
Is finance available for land without planning permission?
If you are looking to buy a plot of land and you have not yet acquired the necessary planning permission, either for a new build project or for a change of use with a view to further development, then your application for funding will still be considered by our panel of investors.
Most of the time, we can secure funding up to 50% of the development site’s value, though we might be able to raise this amount if the land purchase includes an existing property.
Once you secure planning permission, we will review your initial request and allocate additional funds to cover the actual development costs.
Can development finance be arranged for permitted development rights (PDR) schemes?
The answer to this question is yes. Donkey Finance has successfully secured property development finance for numerous projects with PDR permissions in the past, and we have access to a variety of lenders and suitable funding solutions for these types of transactions.
Can I apply for funding via a limited company or business partnership?
Yes, you certainly can. It is perfectly legitimate and entirely acceptable to apply for development funds through a limited company or partnership, provided the director is able to provide a personal guarantee. Other than this, everything works as if you borrowed the money in your name.
How simple is it to get development finance?
Securing development finance can be a complex process, often requiring a combination of factors to work in favour of the borrower. The ease of obtaining development finance hinges on several key elements:
- Project Strength: A well-conceived and comprehensive project plan is essential to demonstrating the project’s feasibility and attractiveness to potential lenders. This plan should encompass detailed financial projections, risk assessments, market analysis, and a clear execution strategy.
- Borrower Experience and Financial Standing: Lenders seek experienced developers with a proven track record of successful projects. This experience instils confidence in the borrower’s ability to manage and execute the development effectively. Additionally, strong financial standing, including a satisfactory credit score and sufficient equity, enhances the borrower’s credibility and reduces the perceived risk for lenders.
- Market Conditions: The overall economic climate significantly impacts the availability and terms of development finance. Favourable economic periods may encourage lenders to be more open to financing projects, whereas downturns often lead to tighter lending criteria and increased selectivity.
In summary, securing development financing requires a combination of a strong project plan, a credible borrower profile, and favourable market conditions. While the process can be challenging, it is achievable with careful preparation and strategic planning.
Can you get 100% development finance?
Yes, it is possible to obtain 100% development finance, also known as joint venture (JV) development finance. This type of financing allows developers to undertake projects without contributing any of their own capital. Instead, the lender provides all the funds required for the project, and in return, they receive a share of the profits upon the property’s sale. The profit-sharing ratio is typically 50/50, but it can vary depending on the lender and the project.
To qualify for 100% development finance, developers typically need to have a strong track record of successful projects and a good credit score. Moreover, the project must boast a prime location, a robust demand for the targeted property, and robust support from feasibility studies and financial projections.
100% development finance can be an attractive option for developers who lack the upfront capital to fund their projects. However, it is important to remember that lenders will carefully assess the risks associated with these projects, and they may require developers to provide personal guarantees or other forms of collateral. Additionally, developers should carefully consider the terms of the profit-sharing agreement, as they will be giving up a significant portion of their potential profits to the lender.
How much does development finance cost?
The cost of development finance can vary significantly depending on several factors, including the project’s size, location, complexity, the borrower’s experience, and the overall market conditions. However, in general, developers can expect to pay interest rates between 6% and 12% per annum for development finance. Additionally, there may be a number of fees associated with development finance, such as arrangement fees, valuation fees, and exit fees.
Here is a breakdown of the typical costs of development finance:
- Interest rates: Interest rates on development finance range from 6% to 12% per annum. The factors mentioned above will determine the specific interest rate that you will receive.
- Arrangement fees: The lender typically charges arrangement fees to cover the costs of processing your application. They are typically a percentage of the loan amount, ranging from 1% to 3%.
- The lender charges valuation fees to determine the property’s value. They are typically a percentage of the property value, ranging from 0.5% to 1.5%.
- The lender charges exit fees when you repay the loan. They are typically a percentage of the loan amount, ranging from 1% to 2%.
Consider all of these costs when budgeting for your development project. You should also shop around for the best deal and compare quotes from multiple lenders before you take out a development finance loan.
