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Lender Criteria For Development Finance

Updated: Dec 20, 2022

It's important that you do as much research as you can before submitting your application if you want to apply for development finance for a building project.

In order to carefully plan your application and make sure that getting development finance is the best choice for you, there are many factors you should take into account. We go over the details you must provide as well as the general lending requirements when applying for funding.

The Following Topics Are Covered Below:

What Is The Lending Criteria For Development Finance?

Development finance lenders typically consider applications on a bespoke basis. However, it's still important to keep the following in mind:

  • The total length of the loan: Will typically range from 6 to 18 months. A development finance loan's terms may be more lenient with some lenders, but they typically range from 12 to 18 months with no penalties for repaying the loan earlier than expected.

  • Loan to value maximum: The amount you want to borrow will be taken into account by the lender as a portion of the project's gross development value. Based on GDV (Gross Development Value), the maximum loan value you can get is typically 55%, though it may be higher and can go up to generally a maximum of 75%

  • Experience: The property developer's level of experience will also matter.

  • Security provided: Security must be appropriate for the structure or location being offered.

  • Location: The site or building's location will also be taken into account when developing.

  • Project feasibility: The lender must have faith in the viability of the project you want to complete. Your application might be flatly rejected if they have too many issues.

  • Age: Although a Special Purpose Vehicle business can typically borrow without any prior trading history, it's essential to be older than 18.

  • Credit Rating: Your development finance approval will primarily depend on the viability of the project itself, provided you do not have a very bad credit history. Bad credit, however, might result in lower terms for competition.

  • Exit Strategy: Your plan of action. If you intend to sell the development, the lender must know how you plan to repay the loan. To make sure a repayment vehicle is viable, they will also check its value.

What Information Is Required For A Development Finance Application?

On conditions of the information the fact that you'll need have to provide to a lender when trying to get a good development finance loan, you will definitely notice that you will require these records:

  • Specifics on the development or building: this contains the value, location as well as cost of the site or house

  • Development costs

  • Development appraisal

  • Preparing permission details: what you will be planning to build and permission you could have already for the website

  • Gross Development Value information: this includes providing proof in the expected finish value towards the lender.

  • The details of almost all candidates involved. If you are actually a limited company then the director's details will all become required too. This includes the history of previous developments transported out, how successful they had been, their CVs, and project earnings from previous developments.

  • Structure of the Company

  • Asset and Liability of the company directors or applicants involved

What Documentation Will I Need To Provide For Development Finance?

You must also include the following details:

  • A breakdown of the project expense

  • The project's entire designs and drawings

  • Planning applications and permissions

  • A detailed project work schedule

  • Information about the project's professionals

  • Specifics of your prior professional development

  • An exhaustive Asset, Liability, Income, and Expenditure Summary(ALIE)

  • A strategy for the project's planned exit

How Does The Application Process Work For UK Commercial Development Finance?

Let's run through how it exactly works:

1. You must first have at least a basic understanding of budgets. Knowing how much your development will cost, what you anticipate selling it for, and the resulting profit margin is crucial.

2. To discuss this further, we would advise getting in touch with the Accelerated Finance team. The best kind of financing for your project will be determined after our development finance experts review your calculations and ask any questions we anticipate a lender might have.

3. We'll provide you with some estimates of the interest rates and fees you can anticipate paying in the lending market today after we've taken a look. We can send over a written quote if you're satisfied that the suggested costs are reasonable and competitive. That includes a list of all the necessary paperwork as well as all interest rates, costs, and terms.

4. We'll collaborate with you on the application if you decide to proceed. To accompany the application, Accelerated Finance produces a comprehensive report that preempts any questions or worries we might anticipate from the lender.

5. The lender will typically request a site visit and meet with you if they are satisfied. This action is beneficial because it improves the lender's understanding of your plans and their involvement in the project. We'll help organize everything, so do not worry!

6. The representative will return to their teams after visiting the site, including the underwriters in charge of determining the risk level and finalizing terms. You will receive a formal lending offer after the underwriters have approved it, along with information on any additional requirements like property valuation and legal documents.

7. In order to perform a valuation, the surveyor must visit the location. They will report to you and the lender what they believe the property(or land) is currently worth, what it will cost, and what you can anticipate selling it for, so this process may take some time.

8. The application is processed by the legal system once the valuation is returned. This entails providing your attorney with the necessary paperwork and offer, making sure you are aware of all the terms and returning a signed acceptance.

9. That's all there is! Your facility will be operational and you can start using the first round of funding once all the signatures have been received back.

How To Ensure Your Development Finance Application Is Accepted

Here are a few easy ways to ensure that your application attracts attention from lenders and has the best chance of success:

  • Accuracy is crucial. Ensure that all of the information you provide is accurate, clear, and well-presented. Then, your application will appear expert and well-planned.

  • Avoid exaggerating any numbers; it is never a good idea to overestimate the finished product's value. Lenders will notice this and not be impressed that your figures are inaccurate as a result of valuations and market comparator tests, which will raise questions about the rest of the information you've provided. They might therefore turn down your application.

  • Know your numbers inside and out. It's critical to be familiar with every important number, not just the most important ones. A detailed breakdown of the project's costs, including important milestones and the times when you'll need to reduce funding, is required. You must be sure that you fully comprehend all of the costs associated with your development before lenders will meet with you to discuss your application.

  • Do not overstate your level of experience; lenders will evaluate any claims you make about prior projects, so resist the urge to appear more knowledgeable than you actually are. Even if this is your first project, please be honest because it is crucial.

Why Use A Development Finance Broker?

In order to secure favorable deals on behalf of our client, a development finance broker like Accelerated Finance works directly with over 50 specialist lenders

Please be aware that not all brokers are completely independent, meaning they serve as a lender's salesperson and may not be able to locate broker exclusives outside of their restricted lender range.

We represent your development finance application in our capacity as your broker. This entails identifying areas for improvement in the application, assisting you in weighing the advantages and disadvantages of various borrowing projects, and ultimately securing the financing you require at the most affordable rates.

Further Reading


This article is intended to provide a general understanding of the topic. The contents should not be treated as advice.

Accelerated Finance Limited only considers applications for commercial or investment properties.

Accelerated Finance Limited is not regulated by the financial conduct authority and only provides unregulated loans via our network of lenders. Your property is at risk if you fail to make payments on a Mortgage Contract.

Please note that Accelerated Finance Limited and its employees do not give financial advice or recommendations on any product.

Author: Aakash Nagrani - Director 

Aakash Nagrani Author
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