Property development finance – Fund building and renovation projects
Property development finance is short- to medium-term funding for building, refurbishing or converting property, typically released in stages against build milestones and repaid on sale or refinance. Compare options from 80+ UK lenders in minutes.
Last updated: October 2025, edited by Joe Morley, reviewed by Vivek Seda
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What is property development finance and how it works
What is property development finance?
Property development finance is a type of short- to medium-term funding used to finance residential, commercial, or mixed-use development projects. It typically provides a large lump sum or staged payments to cover costs such as land purchase, materials, labour, and fees.
Most lenders offer funding based on the gross development value (GDV) - the projected value of the completed project. The loan is usually repaid through the sale or refinance of the property once completed.
How it works
Submit a project proposal - including your business plan, projected costs, and planning permission.
Receive funding in stages - most lenders release funds in tranches based on build progress.
Draw funds during construction - interest is usually rolled up and only paid at the end.
Exit via sale or refinance - repay the finance once the project is complete.
Types of property development finance
Refurbishment finance
This type of finance is designed to help cover construction costs, including the cost of labour and materials. It can also be used to fund internal decorating or structural changes.
Ground-up development loans
Ground-up property development finance is designed for larger projects and covers the price of the land and part of the construction cost. Property development finance is usually around 70-80% of the build cost. The developer must source funding for the remainder.
Conversion finance
This finance type funds the conversion of a building into another type of building. It can also be used to extend or convert a section of a building.
Short-term development finance
For short-term projects, a bridging loan could be the most suitable type of business finance to opt for. Bridging loans are designed for the short term until the loan can be paid back or a longer-term type of finance is secured. You may only need to repay the interest during the loan term length and will then have to repay the full amount once you’ve gained additional funding.
Commercial property mortgage
Large renovations, on the other hand, could be funded using longer-term bridging finance or a commercial mortgage. Commercial property finance is usually repaid monthly over a long period, around 15-30 years.
Bridging finance
A bridging loan might be more suitable if you want to buy, build, or renovate a new property but haven't sold an existing one. Or if you want to purchase a property and renovate it and then pay the full loan amount and interest upon the subsequent sale of the property.
Auction finance
Auction finance can be used to purchase property or land at auction. Funds are usually released quite quickly and then repaid when additional funding is established.
Buy-to-let mortgage
If you want to borrow money to buy, build, or renovate property through a limited company with the intention to rent the premises out, a buy-to-let mortgage may be most suitable.
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Calculations are indicative only and intended as a guide only. The figures calculated are not a statement of the actual repayments that will be charged on any actual loan and do not constitute a loan offer.
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Financial product information
Representative example*
• 9.7% APR Representative based on a loan of £50,000 repayable over 24 months.
• Monthly repayment of £2,291.56. The total amount payable is £54,997.44
*Some lenders may apply fees during the application process, please note that these are set and provided by these entities.
Annual Percentage Rates
Rates from 8.2% APR
Repayment period
1 month to 30 years terms
Common use cases
Residential development
Build single homes or multi-unit residential schemes. Finance can cover both land and build costs.
Commercial projects
Develop or convert retail, industrial, or office space for resale or lease.
Auction property redevelopment
Secure quick bridging finance or short-term development funding to complete auction purchases.
Light or heavy refurbishment
Convert or refurbish existing buildings to increase value or change usage (e.g. office to flats).
Mixed-use schemes
Combine residential and commercial elements in one development, such as flats above shops.
Eligibility criteria for property development loans
Lenders usually consider:
Experience of the developer or contractor
Planning permission and project feasibility
Location, demand and projected GDV (gross development value)
Build costs, timescales and exit strategy
Security available (land, property, guarantees)
Pros and cons of property development finance
Pros | Cons |
Access large sums for ambitious projects | Higher interest rates vs standard mortgages |
Funds released in line with project milestones | Requires detailed plans and monitoring |
Flexible structures (bridging, senior, mezzanine) | Usually requires experience and track record |
Interest can be rolled up and paid at the end | If sales or refinancing fall through, repayment risk rises |
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Want to know more about property development finance?
What is the difference between property development finance and a mortgage?
Development finance is short-term funding for construction or renovation, released in stages. A mortgage is long-term funding secured on a finished property.
How much can I borrow?
It depends on land value, build costs and GDV. Many lenders fund 60–70% of land and build costs, with interest rolled up.
Do I need experience to qualify?
Most lenders prefer developers with a track record, but some specialist lenders support first-time projects with strong plans.
How long does approval take?
Approval can take a few weeks due to project appraisals, but bridging facilities may be faster.
What is the exit strategy?
Common strategies include selling the completed property, refinancing onto a commercial mortgage or retaining rental income.
Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.
It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.
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Vivek Seda
Business Finance Manager
Vivek is the Asset Based Lending Manager at Funding Options by Tide. Vivek has been in the industry for over 10 years, working for both lenders and brokers. His product specialisms cover Asset Finance, Invoice Finance, Property Finance and structured transactions.