Property Development Finance

Introduction

Development finance is used to fund property projects from start to finish.  It’s more than just borrowing – it’s about backing a plan.

From ground-up builds to major conversions, funding is released in stages as the project progresses.

Get the structure right early, and everything else moves faster.

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What people are saying

We would like to say a huge thank you

October 19th, 2026

We would like to say a huge thank you to the whole PROPP team for their outstanding support and professionalism throughout our property remortgage journey. A very special thank you to Megan, Zahid, and Sophie for all their hard work, dedication, patience, and support. We are truly grateful for everything you have done to help us successfully complete the remortgage of our property in Portsmouth. Each of you played an important role in making the process smoother and less stressful for us. Your excellent communication, guidance, and willingness to help made a real difference, and we genuinely appreciate the time and effort you put into supporting us. It is a pleasure to work with a team that is not only professional and knowledgeable but also friendly, approachable, and genuinely committed to helping their clients. Thank you once again, Megan, Zahid, and Sophie. We truly appreciate all your help and look forward to working with PROPP again on our future property investments. We would highly recommend PROPP to anyone looking for a reliable and professional mortgage broker. Excellent service from an excellent team! ⭐⭐⭐⭐⭐

A

Excellent advice

October 17th, 2026

Excellent advice, service and communication throughout the whole process. Jake was extremely helpful!!

Paul

Great professional service.

October 16th, 2026

Every loan application runs the risk of bumps in the road. Maybe a few sail through. But I got my fair share of the bumps. But the team at Propp were on my side the whole way. And when the road got bumpy they really did go the extra mile to smooth it again and get to the finish line. Bravo & thanks.

Customer

Great communication

October 16th, 2026

Great communication from start to finish.

David

Great guidance and support

October 13th, 2026

Great guidance and support throughout the whole process

Rebecca

Super smooth

October 13th, 2026

Super smooth, professional and friendly process! Couldn't recommend Sophie Colmer (and her team) enough!

Rhys

Excellent service

October 9th, 2026

Excellent service from start to finish

James

We are extremely happy with the service

October 7th, 2026

We are extremely happy with the service that was provided. Excellent communication throughout the process. I would highly recommend this company, especially Matt & Molly.

Sarah

A very professional job from a fully focused team

October 6th, 2026

I cannot recommend PROPP highly enough. Over the past year, the team worked doggedly against all the odds to secure the mortgage we needed to add a new property to the portfolio for Izuchukwu Properties Limited. It was not an easy journey, but they never gave up. A special thank you to Nicole, Molly, and Brad — and everyone in the office — for their persistence, dedication, and sheer hard work. They stood by us, kept pushing, and delivered when it mattered most. Truly exceptional service. We look forward to working with you all again on future projects.

Okwuchukwu

Brad and Harriet are heroes.

October 6th, 2026

Brad and Harriet, heroes. Not all of them wear capes.

Nat

Life changing

October 6th, 2026

There is a process to follow but stick with it. They guide you through every single step. What they did for me is life changing.

Richard

Louis and Yve were efficient and professional

October 6th, 2026

Louis and Yve were efficient and professional throughout and helped support me through the process, answering my questions promptly. Thank you so much.

Customer

Modern office building

What is development finance?

Property development finance is designed to provide developers with the capital needed to construct a new building or convert an existing building. It is the most suitable type of property finance to fund a residential development, commercial premises, or industrial building.

Who can get development finance?

We are able to source a development loan regardless of whether you are an experienced developer or first-time builder, however the level of experience you have usually dictates the rate available to you.

How much can I borrow with a development loan?

The maximum you are able to borrow against the development is 70% of the of the purchase price depending on whether the project is a ground-up development or light refurbishment so you will need some capital in advance.

In addition to the development loan you require to fund the purchase, you can borrow up to 100% of the build cost. You will need to make sure the total loan does not exceed 70% of Gross Development Value (GDV).

Maximum development loan varies from lender to lender, so the benefit of using an intermediary like Propp is having access to a wide range of products. Our lenders offer loans from £250,000 to £50 million.

Man looking across office, intently focused.

What is a usual development finance loan term?

The maximum period you can hold development finance is usually 36 months. Your exit strategy will usually be sale of the development or refinance.

How does a development loan work?

Unlike getting a standard mortgage to build a house, development finance lenders release a percentage of the funds at the beginning of the build to get the project underway. The remainder of the money is released in draw-downs as the project continues.

Interest is only charged on the funds that get released, so dependent on how the project progresses the overall costs of the facility could be much lower.

Another way in which property development finance is a good option is if you’re looking to borrow to fund a project that would be rejected by mainstream lenders, such as derelict or rundown properties.

How much does development finance cost?

The cost of development finance varies from lender to lender and your experience as a developer will impact the rate you have access to. Fees, charges and general costs are usually made up of;

  • Cost of Interest – Charged on either a monthly or annual basis.

  • Arrangement fee – Usually between 1% and 2% of the gross facility

  • Exit fee – The fee payable to close the facility. Usually 1%-2% of the total cost of the loan

  • Broker fee – There is usually a fee payable to the broker for searching for and arranging the development loan

Is development finance easy to get?

Providing you have development experience the main considerations from the lenders point of view are the assets you are able to offer as security and the feasibility of the project in terms of profitability. You’ll need planning permission and a statement of works before you start looking for a development loan.

Scaffolding on the outside of a building under development

What can you use development finance for?

Development finance can be used to fund the ground-up development, conversion or refurbishment of a residential development, commercial premises or industrial building.

Can you get development finance for first time developers?

As an investor you may have stumbled across an attractive development opportunity but as someone with zero experience managing a similar project you may wonder how to get the ball rolling, or if it was even feasible.

The good news is, its not impossible. There are lenders open to lending to inexperienced developers on the basis that you have a strong team of experienced contractors, architects, quantity surveyors and project managers that have a proven track record of managing similar projects.

The second element lenders will assess is the viability of the project. Will it be profitable? Does it have planning permission? Are your timelines and budgets realistic?

This may sound daunting, but our development finance experts will support you to assess your proposal and stress test it before presenting it to lenders.

What details do lenders need to assess the viability of a project?

  • Purchase details of the land or building

  • Breakdown of the construction costs

  • Breakdown of additional costs including marketing, finance, insurances, surveys and professional fees etc

  • Details of planning permission

  • Exit strategy. How will the development finance be repaid? Sale of property or refinance?

Unable to get development finance for first time developers? Consider a joint venture.

If your proposal has been rejected or you were unable to find the capital you needed to support the loan, one option is a joint venture with a more experienced developer: you pool your resources to access their know-how and secure the funding you need. This means you can benefit from their experience to get your first project under your belt as well as being able to pool your resources to put up the amount needed.

Think about who you are developing for

Are you looking to build £1m properties at the top end of the market or are you targeting the more accessible mid-range? Lenders prefer mid-range values that are relevant and accessible to your local market as they are more likely to sell quickly.