Mortgage guide
Senior Funding Lenders
Primarily high-street lenders, specialist banks, and short-term funding entities that hold the first charge.
- Published
- 30 Mar 2026
- Last reviewed
- 11 Sep 2026
- Reading time
- 2 min
Senior Funding Lenders
Primarily high-street lenders, specialist banks, and short-term funding entities that hold the first charge. Usually these are the most cost effective lending rates, but they don’t tend to be the most generous with the following guidelines:
- Up to 60% Loan to Gross Development Value (GDV)
- Up to 80% Loan to Cost (LTC)
- 15-20% profit on cost required
- Experience required in the same scheme size
Therefore, the high street is usually a place for lending options only for experienced applicants. Below we will explain options available to first time developers, or borrowers with low collateral requiring extra funding percentages.
Development finance calculator
Development finance criteria
These wider product criteria provide context for this guide. The lender will assess your individual case.
| Criterion | Value |
|---|---|
| Residential development: maximum leverage | Up to 75% loan to gross development value (LTGDV) and 90% loan to cost (LTC) on the cases we arrange. The facility is the lower of the two |
| Commercial development: maximum leverage | Up to 70% LTGDV and 90% LTC, deal dependent. HMO-led schemes up to 75% LTGDV; pure commercial schemes usually nearer 65% LTGDV, especially ground up. Speculative schemes take the same LTGDV percentage |
| Hotel development | Specialist lending, up to 65% LTGDV in our experience, with the loan also capped by cost |
| High-street bank lending | Usually up to 50% LTGDV in our experience, generally for experienced developers with strong balance sheets |
| Facility structure | Initial land or purchase advance, then staged build drawdowns against monitoring surveyor certificates; interest rolled up or retained |
| Day-one land advance | Around 70% of the land value with specialist lenders and around 40% on the high street, in our experience |
| Lender tiers | Senior debt, stretched senior, mezzanine, joint venture or equity. See the tier table in the arithmetic deep dive below |
| Profit on cost | Lenders require a minimum projected profit on cost, commonly 15% to 20% depending on tier and lender; joint venture funders usually judge the scheme on its overall numbers instead |
| Experience | Usually required by senior lenders; stretched senior and mezzanine structures available to first-time developers on the right scheme |
| Planning | Full consent, or outline consent with the reserved matters approved, for ground-up schemes; permitted-development schemes funded on the prior-approval position; land without planning funded by land or bridging loans at lower leverage |
| Term | Up to 36 months on the cases we arrange, covering the build period and a sales or refinance period |
| Minimum and maximum loan | Minimum loan around £50,000; no set maximum on the cases we arrange |
| Borrower types | Limited companies and SPVs (the norm), LLPs, partnerships, individuals, first-time developers, overseas developers |
| Security | First charge over the site; debenture over the SPV; cost-overrun and interest-shortfall guarantees where required |
| Personal guarantees | Vary by lender: some take none, others around 25% to 50% of the loan. In our experience they are usually required unless the LTGDV is under 50% and the loan is £1m or more, and the level is often negotiable |
| Lowest rate | From 0.45% a month as at 1 October 2026, for the strongest schemes; subject to status and lender criteria |
| Exit | Sale of units, refinance onto term buy to let, commercial or residential mortgages, or a development exit loan |
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Frequently asked questions
Who are development finance lenders?
Development finance lenders fall into five groups: high-street banks, lending at the lowest leverage and cost; challenger banks; specialist development lenders, funding to higher ceilings; mezzanine and joint venture funders, providing capital above senior debt; and private lenders and family offices, funding bespoke or time-critical schemes.
What is Gross Development Value (GDV)?
Gross development value (GDV) is the estimated market value of a development once it is complete and ready for sale or letting. Lenders compare the loan with the GDV (the loan to GDV ratio), alongside the build costs, when assessing land and development finance applications.
What does development finance cost upfront?
Arrangement fees, valuation fees, legal fees and monitoring surveyor (QS) fees apply. Interest is usually rolled up and repaid at exit rather than paid monthly.
Can I get development finance with no experience?
Yes. Stretched senior and mezzanine lenders lend to first-time developers and assess the scheme's profit margin, costings and exit in place of a track record. Criteria are tighter, and pricing is usually higher than for experienced developers.
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