What is development finance?
Development finance is short-term funding used to build, convert, or renovate property. It’s commonly used by developers constructing new homes, converting commercial units, or refurbishing multi-unit blocks. Unlike standard mortgages, development finance is released in stages — aligned with project milestones. Birmingham brokers work closely with local developers to structure loans based on project size, cost, and timeline. Whether you’re building new homes in Northfield or converting a warehouse in Digbeth, brokers help you access lenders who understand construction risk and local planning. The right finance ensures your project moves forward — even before the first brick is laid.
Who can apply for development finance?
Property developers, investors, and even first-time builders can apply, as long as there’s a solid plan, exit strategy, and appropriate security. Some lenders prefer experienced developers, but others are open to new entrants with a strong team and clear vision. Birmingham brokers help present your experience (or your contractor’s track record) in a way that builds lender confidence. They’ll also help structure joint ventures, limited company applications, or SPVs (Special Purpose Vehicles) — commonly used for one-off projects. Even if you’re new to development, with the right advice and support, you can still access funding for your first build.
How is development finance structured?
Funding is typically released in stages — often referred to as drawdowns — based on construction progress. The first stage covers land or property purchase, followed by funds for groundworks, build stages, and final finishes. Each drawdown is usually subject to a site inspection and sign-off. Birmingham brokers help you forecast costs, schedule drawdowns, and work with lenders to keep cash flowing on time. They’ll also explain how interest is charged — often rolled up and repaid at the end — and whether fees apply at each stage. With the right structure, development finance supports your project every step of the way.
How much can I borrow for a development project?
Most lenders will fund up to 70% of the land/property value and 100% of build costs — as long as the total loan does not exceed 65–75% of the Gross Development Value (GDV). That’s the projected value once the project is complete. A Birmingham broker will calculate your loan needs and match you with lenders who support your scale of development. Whether you’re building five flats or a single house, they’ll help ensure the deal stacks up. They’ll also explain how your own contribution — or equity — affects the amount you can borrow and the terms you’re offered.
Do I need planning permission in place to apply?
Ideally, yes. Most lenders require full planning permission before they’ll approve funding, though some offer pre-planning or bridge-to-develop options. Birmingham brokers help you understand which lenders are comfortable with early-stage projects and which need detailed permissions. If your site only has outline planning or you’re awaiting approval, your broker can explore bridging finance until full development funding becomes viable. They’ll also liaise with your planning consultants, architects, and solicitors to keep things moving. Having permission sorted speeds up the process and opens the door to more competitive terms — but there are still options if you’re not quite there yet.
What’s an exit strategy and why is it important in development finance?
An exit strategy is how you plan to repay the loan once the project is complete. This could be selling the finished units, refinancing onto a buy-to-let mortgage, or selling the entire development to an investor. Every lender will want to see a clear, realistic exit plan before funding the project. Birmingham brokers help you define this upfront — including timelines, market value estimates, and any pre-sale or refinance agreements. A strong exit strategy reduces lender risk, improves your loan terms, and keeps your project on track. Without it, most lenders won’t proceed, no matter how strong the build plan is.
What fees and costs are involved in development finance?
You’ll typically pay an arrangement fee (1–2% of the loan), interest on funds drawn (often 6–10% annually), legal fees, valuation fees, and monitoring surveyor costs. Many lenders roll up the interest, meaning you pay it all at the end — which helps with cash flow. Birmingham brokers give you a full cost breakdown so there are no surprises later. They’ll also help you budget for overruns, contingency funds, and final snagging. Knowing the full cost upfront ensures you price your development accurately, set realistic margins, and avoid funding shortfalls mid-build.
Can development finance be used for conversions or refurbishments?
Absolutely. Development finance isn’t just for ground-up builds. It also supports commercial-to-residential conversions, HMO developments, office refits, and large-scale refurbishments. If your project increases the property’s value significantly and requires staged funding, development finance may be more appropriate than bridging. Birmingham brokers help determine whether your project qualifies — and match you with lenders who understand the nature and complexity of refurbishment work. They’ll also help manage timelines, contractor contracts, and valuations to keep the project on track and fully funded at every stage.
Why use a broker for development finance?
Development finance is complex and fast-moving — with tight margins and lots of moving parts. A Birmingham broker brings clarity and control by sourcing lenders who understand your project, handling paperwork, and managing lender communication. They help structure the loan around your build timeline, monitor valuations, and ensure funds are released on time. Most importantly, they protect your investment by avoiding unsuitable terms, missed deadlines, or funding gaps. Whether you’re building new homes or converting existing space, a broker gives you the support and confidence to move forward — knowing your funding is sorted from the ground up.
