Financing real estate development can be challenging and expensive so it is essential to find the right provider that offers you the right loan product.
There are a variety of lenders that offer a range of products that cater to different types of developments and their uses as well as offering loans based on your development experience and financial situation.
We’ve looked at what some of the leading real estate development finance lenders offer so you can see which lenders offer products that may suit your needs.
1. Lombard Funding
Some of the features and benefits of Lombard Funding real estate developer financing.
We will advise you and package structure to suit you
Suitable for individual characteristics of multi-unit systems
They will get to know your business before recommending a package
Offer a package of financing
The maximum loan amount is up to 80% of the property value
A wide range of properties can be used as collateral
The size and scope of development can guide financing options
Funding includes equity, joint venture and bridge financing
Suitable for light development, heavy renewal and ground development
Experienced specialist provider
Lombard Funding is a specialist financial services provider that offers transition loans, development financing and other real estate financing designed for developers. They offer a range of financial products to developers which includes senior debt, spanning debt, mezzanine debt, equity, joint venture and bridge financing.
Property development financing from Lombard Funding is a bespoke solution where they listen to your needs and scrutinize your plans to offer you the best package to suit your circumstances. They provide financing for properties that can be single properties or multi-unit developments. They offer to finance up to 80% of the value of the property but may consider a wider range of properties as collateral.
Lombard Finance website
2. West One Loans
Some of the features and benefits of West One Loans real estate developer financing.
Designed for young developers
Loans from £1m to £7.5m
Offers initial loans of up to 70% of the value of the property
It can finance up to 100% of the construction costs
A term of up to 24 months
Up to 30 units will be funded to a maximum of £1.5m each
Suitable for residential developers and versatile
It will lend to sole traders, limited companies, and limited liability companies
Lenders must have completed at least two similar projects
You must not have CCJs or missed payments
Available for properties in England and Wales
West One Loans provides loans to the real estate development industry that caters to smaller developers with some development experience. To be eligible for a loan, you must have completed two or more similar projects. Their loans can be used on residential and mixed-use properties in England and Wales.
West One Loans will fund projects as small as 30 units up to £1.5m in value. They offer loans that finance up to 100% of the construction costs but the maximum loan is at 80% of the property value. Loans are available from £1m to £7.5m over a period of up to 24 months.
West One Loans Website
3. Nucleus Real Estate
Some of the features and benefits of Nucleus Real Estate Developer Financing.
Secured mortgage loans
Available for residential and commercial properties
Loans from £25,000 to £20m
Term up to 7 years
The property portfolio can be used as collateral
You will consider the opposite credit
May finance businesses that do not meet standard lending criteria
Available to startups
The process may take 2-3 weeks
Nucleus is a professional trade finance company whose loan products include real estate financing such as a loan secured against a property. They offer loans on residential or commercial properties and may even use a portfolio of real estate as collateral. To be eligible, you must have complete business accounts, or a cash flow forecast and business plan if you are a starter.
Nucleus offers competitive rates on its loans available for periods of up to 7 years to companies in England and Wales. They give out loans from £25,000 to £20m. They will consider businesses that do not fit the usual lending criteria and those that have negative credit.
4. Aldermore Bank
Some of the features and benefits of Aldermore Bank developer financing.
Designed for developers and experienced home builders
Can be used for new buildings, redevelopment, conversions, and renovations
Suitable for mixed uses and student housing
Quick turnaround in less than 24 hours
Loans up to 85% of the value of the property
Flexible loan terms
Loans start from £500,000 up to £25m
A term of up to 24 months
Interest rates are set for each loan
Market-leading timetables for the release of funds
Available in England, Wales, and parts of Scotland
Aldermore Bank is a specialist savings and lending bank offering a range of business loans and lending products which includes property development financing. They state that their property development financing is designed for experienced developers and home builders that can be used for new builds, redevelopment, conversions and renovations including mixed-use and student housing.
Aldermore Bank claims that they offer fast turnaround for their market-leading loans. Their loans are available for properties in England, Wales and parts of Scotland for up to 85% of the property value. Loans range from £500,000 to £25m, with terms of up to 24 months.
Dermoor Bank website
5. Shoprock Bank
Some of the features and benefits of Shawbrook Bank developer financing.
Meets the needs of certified developers
Suitable for residential and mixed-use systems
Available for renovations and new construction
The minimum loan is £2.5 million
The maximum loan is £25 million
Individual property value between £150,000 to £1.5m
The loan amount is up to 80% of the value of the property
They will loan a portion of the purchase cost and 100% of the construction costs
Financing up to 65% of the total development value
We will consider loans outside of these criteria on a case-by-case basis
An experienced team to support you
Shawbrook Bank is a specialist savings and loan bank offering a range of business products including property development financing which it states offers through its unique approach. They cater their property development products to well-established developers of residential, mixed-use and new build schemes.
Shawbrook Bank’s property development finance products are commercial mortgage lending from £2.5m to £25m. They offer up to 80% of the property value or 65% of the total development value. They cap individual property value at between £150,000 to £1.5m although they will take into consideration higher values.
Shopbrook Bank website
Some of the features and benefits of LendInvest real estate developer financing.
Products that provide renewal, development, and out-of-development services
Suitable for residential and semi-commercial projects
Loans up to 70% of the value of the property
Loans of a minimum of £200,000
Loans up to a maximum of £15m
A term of up to 24 months
Limited to Freehold or Leaseholds of more than 60 years
First shipped stock required
Conditions vary by product and purpose
Available for properties in England, Wales and Scotland
LendInvest claims to be the UK’s leading online mortgage marketplace offering a range of financial lending products to property developers. They offer three lending products tailored to the different needs of developers, namely renewal, development and exit development.
LendInvest makes financing available for residential and semi-commercial developments in England, Wales and Scotland. Each of the products has different terms and criteria for the loan, but the development product offers maximum loan terms of up to 70% of the value of the property for a period of up to 24 months. Some products will require a first shipment security.
7. United Trust Bank
Some of the features and benefits of real estate development financing for United Trust Bank.
The specialist development finance provider
Offers support a wide range of developments including residential and commercial
Loans from £500,000 to £20m
The maximum loan amount is 60% of the total development value
A term of up to 18 months
Borrowers are required to have experience and financial standing
Familiar with the development sector
Claims to provide first-class support
United Trust Bank is a specialist development finance provider that uses its sector expertise to help fund development opportunities with experienced developers in good financial standing. They offer flexible and tailored packages that they claim are competitive.
United Trust Bank real estate development financing is available for residential, commercial and mixed-use developments, conversions and renovations, they also include those requiring planning gains and term sales financing. Their loans start from £500,000 up to £20m with a maximum gross development value of 60% being funded on terms of up to 18 months.
United Trust Bank website
8. Octopus Ownership
Some of the features and benefits of Octopus Property developer financing.
It offers loans on smaller development projects as well as larger development projects
It will lend against a wide range of developments
Includes a variety of types of rental properties
Maximum loan amount 85%
A term of up to 30 months
It offers different conditions depending on the type of development
Loans include bridging loans
Minimum loans of £50,000
Arrangement fees apply
Checkout and early checkout fees apply to some products
Octopus Property is a specialist financing provider serving real estate developers and investors offering a wide range of loans for development projects. They offer four types of packages – Light Development, Senior Development, and Graduation Development. Real estate can be commercial or residential including multifunctional homes, hotels, student accommodations and holiday homes.
Octopus Property provides financing for residential and commercial opportunities through products that include bridging loans, buy-to-let, renovation, development and auction. Each of these products offers different loan terms but the maximum loan amount is 85% with a minimum loan amount of £50,000 and a maximum loan tenure of 30 months.
Octopus Property website
9. Masthaven Bank
Some of the features and benefits of Masthaven Bank developer financing.
Flexible real estate development financing suitable for a variety of development projects
Fast and flexible approach
The simple and hassle-free application process
Offers D&F products and light development
Credits up to 60% of the purchase price
A term of up to 18 months
Loans from £100,000 to £2m
Tailored lending solutions
Available for properties in England and Wales but will consider Scottish properties
Access to experienced decision-makers
Masthaven Bank is a specialist savings and loan provider that offers tailored real estate development financing products. They provide financing for a wide range of developments including new builds, self-build projects, renovations, and conversions from commercial to residential.
Masthven Bank offers two packages that can be tailored to your needs namely Development Finance and Light Development. Each of these packages has different loan terms offering a maximum loan amount of up to 60% of the purchase price or total development value and financing of up to 100% of late construction costs. Loans are available from £100,000 to £2m with terms of up to 18 months.
Masthaven Bank website
10. Fortwill Capital
Some of the features and benefits of Fortwell Capital real estate developer financing.
Specializes in high-value loans to finance development
Suitable for residential and commercial projects
It meets the needs of developers and investors
Maximum loan amount 80%
Minimum loans from £5m to £100m
Private housing and alternative housing opportunities will be funded
Offers large or extended loans on a first-cost basis
Mezzanine loans are also offered on a second shipment basis
Suitable for new buildings, renovation and permitted developments
Focuses on developments in London, the South East and existing regional centers
Fortwell Capital is short to medium-term financial lender offering products to developers and investors in the UK real estate market. Their main focus is on London, the South East, Transport for London cities and established regional centers in the UK. They offer high-value loan development financing and only lend to accredited developers and investors.
The development finance package from Fortwell Capital provides loans in the amount of between £5 and £100 million for development projects which can be residential or commercial. They fund projects that are new buildings, renovations and developments permitted. They offer three types of financing, large and extended on a first-cost basis and mezzanine loans on a second-charge basis.
Frequently Asked Questions
Can you get 100% development funding?
100% development financing, commonly referred to as joint venture financing or joint venture financing is a way for real estate developers to obtain funds to finish a project without investing their own money.
There are two types of development financing, 100 percent financing and joint venture financing. The first is when the lender does not charge interest on the loan but instead requires a larger portion of the profits. JV financing is where the lender charges interest on the amount but wants a lower profit cut after the development is complete.
Usually, the lender and developer split the profits 50/50; However, this may vary.
Many lenders will want you to back up the loan with another property or several properties or other assets of value that you own and have sufficient equity. It may be possible to obtain a no-deposit mortgage if these conditions are met.
How do you fund self-construction?
Self-build mortgages allow you to borrow money to purchase the land you want to build on and then pay off the loan in installments instead of in one big payment at the beginning. This financing option also provides financing “up front” for each phase of the project.
You can borrow about 75% of the cost of the land and 60% of the cost of the construction, which means you still need a large deposit.
The UK Government has indicated that self-builders will be exempt from paying Community Infrastructure Tax (CIL), which is normally levied when a new property is granted planning permission.
However, you must follow the protocol which is time sensitive. It also reaffirmed its plan to remove builders themselves from Section 106 (S106) affordable housing contributions, but this has been questioned and changed regularly.
What is mezzanine financing?
Mezzanine financing combines loans and equity. A lender will extend credit to a business, but if the business cannot repay the lender, the lending organization will receive a share in the business through “equity”.
Mezzanine financing may be seen as either a financial risk or less expensive equity because it carries a higher rate of interest (12%-20%) than large debts received via banks but is much less expensive than equity in terms of the total cost of capital. Mezzanine financing allows a business to raise more money and improve its return on equity.
Why do real estate developers refinance?
Refinancing a development project can help real estate developers avoid the costs of penalties if their project is delayed. However, it can also benefit real estate developers who want to finance their next project.