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Property Development Finance

Finance to get your next property development project off the ground.

How do development loans work?

Development finance is a form of property finance that has been specifically designed with experienced property developers in mind, providing funding to acquire property or land and for the project costs. It is available for both residential and commercial developments.

Unlike bridging finance or commercial mortgages, which just advance a percentage of the purchase price or value up front, development finance will subsequently finance the actual refurbishment or build costs also.

When looking at your application, the development finance company will be looking at the loan-to-GDV (gross development value or end value) and the loan-to-cost (total project costs) – along with your ability to execute the development.

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Up to 70% gross development value

How do development loans work?

Development finance companies will help you to acquire or refinance the property or land that you want to develop by providing up to 65% as a loan with a cash or equity contribution for the balance coming from you. If you already own the asset then you may not need to finance this stage.

After that, your development loan lender will work with you to understand your needs and budget your lending as the project progresses. A surveyor will be appointed by the lender who will oversee the project as it’s completed, signing off the next drawdown in line with your agreement.

Development finance is a relatively short-term form of lending which is only intended to fund the development of the property or properties, hence the name. Therefore you will need to demonstrate that there’s a solid exit plan at the end of it. If your exit plan is to sell the property or properties, you will need to show that there’s a suitable demand for them in the area and pre-sales would be an advantage. If you’re going to refinance, an agreement in principle for a commercial mortgage is ideal.

Development finance is available for a term of up to 24 months but there are no penalties for repaying early, although there may be an agreed exit fee.

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A Key Borrowing Tool

Whether you’re an amateur developer purchasing your first residential property or have built up a burgeoning commercial portfolio, development finance has become a key borrowing tool across the spectrum of property development.

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Minimised Risk

Sourcing funding for property developments poses a higher risk to lenders than straight forward mortgages which is why they are structured to help minimise the risk and cost to both you and the lender.

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Financing The Build

Development loans will help you to finance the actual refurbishment or build of a project, whereas a bridging loan will give you the upfront cash to make the initial purchase until a more traditional mortgage can be sought.

Trade Finance

Trade Finance

Funding to pay your suppliers for stock or release cash that’s tied up in stock you already own

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Invoice Finance

Invoice Finance

Boost your cash flow by releasing the cash that’s tied up in your outstanding invoices

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Business Loans

Business Loans

Loans can be used for a variety of reasons and the funds can be in your bank account in hours

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Bridging Finance

Bridging Finance

Fast and flexible property finance that can be arranged in a matter of days

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Commercial Mortgages

Commercial Mortgages

From purchasing your trading premises to refinancing your investment portfolio, commercial mortgages are used by SMEs and property investors alike

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Development Finance

Development Finance

Designed for experienced developers, this funding provides the backing to purchase land and build new properties

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How much does it cost?

The main fees to consider are the arrangement fee, the exit fee and the interest rate.

The arrangement fee and exit fee are a percentage of the loan value, typically 2% and 1% respectively. These fees are often deducted from the day one cash advance which is something to be aware of when calculating how much you will receive on day one.

Interest rates are normally presented on a monthly basis with development finance. The interest is charged in arrears can either be serviced monthly or rolled up and deducted from the initial advance and repaid at the end of the term. If servicing the loan, you may be asked to demonstrate how you plan to do so.

There are likely to be other associated costs to consider like legal fees and valuation fees.

What are the benefits?

The obvious benefit of development finance is that it allows you wouldn’t have been able to fund from cashflow. This means you can take on bigger and better projects that will ultimately allow you to make more profit. Of course you will need to contribute some capital towards the project but sharing the burden with a lender means you can keep some cash in your reserves to cover budget overruns or to take advantage of any great opportunities that come your way.

Key features:
• Finance to purchase the site and for build costs
• Designed for experienced developers
• Loan of up to 70% of gross development value (GDV) available
• Interest can be serviced or rolled up until the end of the term
• Terms of up to 24 months
• Loans from £300k upwards
• Clear exit plan required from the outset
• A first charge on the site will be taken

Start your journey with Ping Finance today.

At Ping Finance, we have a professional team of experts in property development finance. Take the first step to finding out more about a property development loan by clicking “Let’s Talk” and filling out the quick enquiry form. Alternatively, you can contact us on 0330 058 2330. Our offices are based in Bolton, Greater Manchester.

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Ground Floor,
Unit B,
Lostock Office Park,
Lynstock Way,
Lostock, Bolton,
BL6 4SG

Ping Finance is a trading name of Ping Finance Limited which is registered in England and Wales under Company Number is 10973327, whose registered address is Ground Floor, Unit B Lostock Office Park, Lynstock Way, Lostock, Bolton, England, BL6 4SG. Ping Finance Limited is also registered with the Information Commissioner under Registration Number ZA447449.