How development lenders size a loan
Lenders cap the facility at a percentage of GDV (often 60% to 70%) and a percentage of total costs (often 80% to 90%). Whichever is lower usually applies.
Why profit margin matters
Most lenders want to see a healthy profit on GDV, often 15% to 20% or more, so the scheme can absorb cost overruns or a softer market.
Frequently asked questions
What is LTGDV?
Loan to gross development value: the loan as a percentage of the expected end value of the completed scheme.
Is development interest paid monthly?
Usually not. Interest is normally rolled up and paid on exit from sales or refinance, and is charged only on funds drawn.
How much equity do I need for development finance?
It depends on the scheme, but developers commonly fund 10% to 30% of total costs, plus any costs the lender won't fund.
Important: Bridging and development finance are short-term, secured borrowing and can be expensive. You need a clear, realistic exit plan. Loans secured on a home you live in may be FCA-regulated; most others are not. Your property may be repossessed if you do not keep up repayments.