Mortgage guide
Development finance for refurbishment finance
Development finance can support refurbishment involving structural works, extensions or major alterations. Read how it can cover acquisition and build costs for these projects.
- Published
- 4 Aug 2026
- Last reviewed
- 8 Oct 2026
- Reading time
- 2 min
Development finance for refurbishment finance
Development Finance for Refurbishment Projects
For refurbishment projects involving significant structural works, such as extensions, major reconfigurations, or full-scale renovations, development finance is typically the most appropriate funding solution. Unlike standard bridging or refurbishment mortgages, development finance is structured to support complex projects that require both acquisition funding and comprehensive build cost finance.
Funding structure and leverage
Development finance facilities can often fund up to 75% of the purchase price and up to 100% of build or refurbishment costs, subject to overall project viability. Funds for works are released in staged drawdowns, aligned to the build programme and verified by an independent monitoring surveyor, ensuring controlled deployment of capital as the project progresses.
Core underwriting metrics
Lenders assess development finance applications using several key financial measures:
Core underwriting metrics
| Metric | What it means |
|---|---|
| Loan to Gross Development Value (LTGDV) | The loan amount compared to the projected value of the property once works are complete, typically capped at 75%. |
| Loan to Cost (LTC) | The proportion of total project costs being financed, often up to 90%, reducing the developer’s required capital input. |
| Profit on Cost (POC) | The projected profit relative to total development cost. Most lenders require a minimum 15% POC to provide a buffer against cost overruns or market movement. |
Suitability and borrower profile
Development finance is best suited to experienced investors or developers who are undertaking structural or high-value refurbishment projects and require full financial backing. Lenders place weight on track record, professional team involvement, realistic costings, and a clearly defined exit strategy, typically sale or refinance.
Bridging calculator
For context, these are the wider product terms covered by this guide. Availability and eligibility depend on your circumstances and the lender.
| Feature | Detail |
|---|---|
| Day one max LTV | 75% LTV |
| Product fee | 2% Arrangement fee |
| Rate | From 0.72% per month |
For context, these are the wider product terms covered by this guide. Availability and eligibility depend on your circumstances and the lender.
| Feature | Detail |
|---|---|
| LTV | 75% LTV |
| Product Fee | £999 Flat Product Fee |
| Rate | 3.85% |
| Fixed Term | 5 years |
Related case studies
Frequently asked questions
What is development finance?
Development finance is funding for property development projects such as new builds, renovations and conversions. It covers the construction costs and the other costs of the scheme, and is released in stages as the work progresses.
How does development finance compare to a bridging loan?
Development finance is similar in cost and term to bridging loans but is designed for construction and major refurbishment. It can fund up to 100% of build costs and is assessed against gross development value, making it more suitable for larger projects.
How is development finance drawn down?
Development finance is drawn down in arrears against monthly certificates from the lender's monitoring surveyor, who confirms works completed, costs incurred and programme position. Contractors are paid after certification, so the developer's working capital bridges the gap between work done and funds released.
What is co-living development finance?
Co-living development finance funds large-scale professional shared-living schemes with private rooms and serviced communal space under single management. It is underwritten as specialist or commercial development on operator strength, scheme-level income and a sui generis planning use, and the exit is investment lending against stabilised income instead of unit sales.
What is ground up development finance?
Ground up development finance is short-term funding for a scheme built from a cleared or vacant site, foundations upwards. A land advance is made on day one, then build costs are released in stages against the monitoring surveyor's certificates, and the loan is repaid from the sale or refinance of the finished buildings.
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