Development Finance FAQs

How is a development loan structured?

A development loan can be structured in many different ways but normally there are three facilities within the loan which can match the borrowers’ requirements during the construction stages. These are:

  • Land Facility (which is advanced against the purchase/refinance)
  • Build Facility (which is advanced in arrears after a progress report from a monitoring surveyor)
  • Retained Interest & Fees Facility (which services the loan and funds the arrangement fees)
What is a development appraisal?

A full development appraisal normally covers all aspects of the property including legal, planning and due diligence. Most of time however, it is just a financial spreadsheet which helps property developers to calculate the NPV (net present value) of a project.

Preparing a rigorous development appraisal is crucial for every property developer before making an offer to purchase any development site.

Why is a rigorous development appraisal important?

An accurate development appraisal is crucial when considering an opportunity. It is very important to input the correct data as developers need to be comfortable with the residual value of the site and the real cost of the project.

For instance, slight variations in GDV, build cost, professional fees and interest cost can completely change the feasibility of the project.

What do you need to prepare before applying for a development loan?

You will need to prepare a full pack of information in order to allow the lenders to analyse the project. At Avamore, we recommend that the pack includes the following:


  • Project address
  • Concept of the development
  • Development appraisal summary
  • Planning information
  • Professional team
  • Contractor background
  • Build cost breakdown (if not covered in the development appraisal)
  • Accommodation schedule including:
    • Number of units
    • Number of bedrooms
    • Price per square foot
    • Price per unit
  • Sales comparable
  • Clear exit strategy
Do you need to be an experienced developer in order to obtain a development finance?

Development finance is now available to less experienced developers or real estate professionals from the construction industry who have never undertaken a project as property developer.

Most non-bank lenders like us at Avamore are very flexible and creative when it comes to providing solutions and products for market newcomers.

What is a development loan exit strategy?

Normally it is a function of the developer’s understanding of the market dynamics and ultimately it depends on very clear concept of the developed product. The best strategies also include alternative options and back up plans.

A clear and rigorous exit strategy is very important when approaching a development lender as it is a good testament of professionalism and experience.