--- title: "Development Finance For First Time Developers" description: "Development finance without a track record: stretched senior lending up to 75% LTGDV and 90% loan-to-cost, mezzanine up to 100% of costs, private investors funding deposits, and the three ratios lenders judge." url: "https://mortgagelane.com/insights/development-finance-first-time-developers" site: "Mortgage Lane" collection: "posts" date: "2026-03-30" author: "Joseph Lane" category: "Insights" reviewed: "2026-10-08" reading_time: "10 min" byline: "Joseph Lane" author_credentials: "CeMAP · FCA authorised firm" language: "en-GB" robots: "index,follow" --- # Development Finance For First Time Developers Development finance without a track record: stretched senior lending up to 75% LTGDV and 90% loan-to-cost, mezzanine up to 100% of costs, private investors funding deposits, and the three ratios lenders judge. Options for first-time developers looking for development finance for renovation or ground-up development schemes. [Development finance](https://mortgagelane.com/definitions?term=development-finance) Development finance Property finance used to fund a construction or conversion project, with borrowing structured around the project budget and progress. [Read the full definition of Development finance](https://mortgagelane.com/definitions?term=development-finance) ## Development Finance For First Time Developers Speak to a Mortgage Lane adviser about your options. ## In short Development finance for first-time developers is funding for ground-up builds, conversions and heavy refurbishments from lenders that do not require a track record. **Development finance for first-time developers is funding for ground-up builds, conversions and heavy refurbishments from lenders that do not require a track record.** High-street development lenders usually want experience on schemes of the same size. In development finance, first-time developers are assessed by specialist and stretched senior lenders on the scheme's profit margin, costings and exit instead. Funding comes from high-street banks, challenger banks, venture capitalists (often called VCs), private equity firms and joint venture lenders. Mortgage Lane arranges development finance for first-time developers on residential and commercial schemes. The funding structures available without experience, the three numbers every application is judged on and the costing mistakes that sink first projects are set out below. ## The three numbers every development application is judged on **Every development finance decision runs on three ratios: profit on cost, loan to gross development value and loan to cost. A first-time developer should know all three before approaching any lender.** - [Profit on cost (POC)](https://mortgagelane.com/definitions#def-profit-on-cost) is the projected profit as a percentage of total project cost. Lenders set a minimum, commonly around 15% to 20% depending on the tier, and a scheme below it falls outside criteria whatever else it has going for it. Calculating POC honestly *before* paying for applications and valuations is the cheapest check a first-time developer can make. - [Loan to gross development value (LTGDV)](https://mortgagelane.com/definitions#def-loan-to-gross-development-value) is the gross loan against the end value of the completed scheme, its [gross development value (GDV)](https://mortgagelane.com/definitions#def-gross-development-value). It is the lender's headline risk measure: a higher LTGDV means more leverage and more risk. - [Loan to cost (LTC)](https://mortgagelane.com/definitions#def-loan-to-cost) is the loan against total project cost: land, construction, interest, professional fees, planning, legal costs and taxes. On the cases we arrange, LTC runs up to 90%, and some mezzanine structures reach 100%. ## Lending options for first-time developers **The market splits into four structures, and only some of them work without experience.** Senior funding comes from high-street and specialist banks, secured by a [first charge](https://mortgagelane.com/definitions#def-charge-priority). It is the cheapest money with the tightest criteria: in our experience high-street banks usually lend no more than about 50% LTGDV, require 15% to 20% profit on cost and want experience on schemes of the same size. This tier is hard to reach without a track record, which is why the structures below exist. Stretched senior funding comes from specialist banks and short-term lenders, also on a first charge, and is the first-time developer's main route: up to 75% LTGDV and up to 90% LTC on the cases we arrange, with profit on cost of around 15%. Prior experience is not always required, and private investor funds can be accepted for the deposit and upfront costs. There is one charge and one lender, with more leverage than senior debt and pricing to match. [Mezzanine funding](https://mortgagelane.com/definitions#def-mezzanine-finance) sits behind the senior lender on a second or third charge and is repaid after the senior debt at exit. It takes the capital stack to 75% to 80% LTGDV and 95% to 100% LTC, and prior experience is not always required. If the numbers only work with mezzanine from day one, the deal is usually too thin. Mezzanine is more often used for cost overruns, delays and releasing equity part way through a project, and it can save a scheme stuck in the build phase. Full detail is on [mezzanine finance](https://mortgagelane.com/short-term-finance/mezzanine-finance). Under a profit split, the lender funds the whole project, charges interest and takes a share of the net profit at exit, usually 50% on the cases we arrange. It is only worth it on unusually profitable schemes, and it mainly suits builders who want to run their own first scheme without putting their own capital at risk. As at 1 October 2026, the lowest development finance rate we were seeing was 0.45% a month, for the strongest schemes. Stretched senior facilities for first-time developers price above that, because pricing rises with leverage, scheme risk and the developer's experience. Every rate is subject to status and lender criteria and can change. ## The costing mistake that sinks first-time applications **Under-budgeting the build to flatter the profit is a common and expensive first-timer error, because the lender lends against the [quantity surveyor](https://mortgagelane.com/definitions#def-quantity-surveyor)'s costings rather than yours.** On a development loan the lender instructs a quantity surveyor (QS) to assess your costings against current market prices, and the figures the QS approves become the figures the lender uses. If the QS concludes your costs are under-budgeted, your POC drops (possibly below the lender's minimum), the funding percentage falls after the valuation, and you cover the shortfall after you have already paid for applications and reports. The disciplines that avoid it: 1. Engage a QS before finalising the budget rather than waiting for the lender to instruct one. An upfront assessment costs little against a funding cut part way through the process. 2. Benchmark your costs against industry cost data. 3. Carry a contingency scaled to the scheme's complexity and risk. 4. Review the costings with the QS as the build progresses, so the projections stay in line with actual costs before each drawdown. ## Drawdowns, the QS, and how to spend less on both **Development finance is released in stages, called [drawdowns](https://mortgagelane.com/definitions#def-drawdown), and the QS signs off progress before each one and charges for every site visit.** Fewer, larger drawdowns therefore cost less than many small ones. A main contractor who can complete substantial phases between drawdowns cuts the number of QS visits, smooths cash flow and keeps the project moving. On the lender's side, asset managers monitor the security's condition and value through the term. Keeping the QS and the asset manager informed and satisfied keeps the funding continuous. ## Building the CV that unlocks the next tier **A completed first scheme is worth more than its profit, because it opens the way to senior funding.** High-street development lenders want a developer's CV showing a track record on comparable schemes. Document the first project as you go (scheme size, budget against outturn, timeline and exit achieved), so the second application can price a tier cheaper than the first. ## Development Finance For First Time Developers: frequently asked questions **Senior funding lenders** Mainly high-street lenders and specialist banks that hold the first charge. [Read more about Senior funding lenders](https://mortgagelane.com/guides/development-finance-first-time-developers/senior-funding-lenders)[Get in touch about Senior funding lenders](https://mortgagelane.com/contact) [Gross development value (GDV)](https://mortgagelane.com/definitions#def-gross-development-value) · [Loan-to-cost (LTC)](https://mortgagelane.com/definitions#def-loan-to-cost) **Mezzanine funding** Mezzanine finance suits a scheme where cash is running low but the asset still holds substantial equity. It is a subordinate loan ranking behind the existing lender, repaid when the project completes. Used alongside development finance, mezzanine can ease cash flow and rescue deals stuck in the build phase. The lending guidelines for mezzanine funding tend to be: - 75% to 80% loan to gross development value (LTGDV) - Up to 95% to 100% loan to cost - Prior experience not always required **Stretched senior lenders** Specialist banks and short-term lenders that offer a higher LTGDV (loan to gross development value), secured with a first charge. This can suit borrowers who want to stretch their borrowing with limited experience and little collateral. The lending guidelines for stretched senior development lenders tend to be: - Up to 75% loan to gross development value (LTGDV) - Up to 90% loan to cost (LTC) - Profit on cost of around 15% - Prior experience not always required - Private investor funds may be permitted for the deposit and upfront costs **Profit split** Some lenders finance the entire project, charging interest and taking a share of the net profit at the end, typically 50%. For first-time developers this rarely suits unless the deal is very profitable, although it can work well for builders who want to try their own scheme. ## Related mortgage insights and guides - [2026](https://mortgagelane.com/guides/insights-development-finance-first-time-developers-details)Guide[Development Finance For First Time Developers: detailed guide](https://mortgagelane.com/guides/insights-development-finance-first-time-developers-details)Detailed explanations and criteria for Development Finance For First Time Developers.[Read more about Development Finance For First Time Developers: detailed guide](https://mortgagelane.com/guides/insights-development-finance-first-time-developers-details) - [2026](https://mortgagelane.com/guides/development-finance-first-time-developers/senior-funding-lenders)Guide[Senior Funding Lenders](https://mortgagelane.com/guides/development-finance-first-time-developers/senior-funding-lenders)Primarily high-street lenders, specialist banks, and short-term funding entities that hold the first charge.[Read more about Senior Funding Lenders](https://mortgagelane.com/guides/development-finance-first-time-developers/senior-funding-lenders) - [2026](https://mortgagelane.com/mortgages/first-time-buyer-mortgages-scotland)Mortgage[First Time Buyer Mortgages Scotland, LBTT, LIFT and Deposits](https://mortgagelane.com/mortgages/first-time-buyer-mortgages-scotland)First-time buyer mortgages in Scotland: 5% deposits, the Home Report and offers over, LBTT relief to £175,000, LIFT and the First Homes Fund.[Read more about First Time Buyer Mortgages Scotland, LBTT, LIFT and Deposits](https://mortgagelane.com/mortgages/first-time-buyer-mortgages-scotland) ## Frequently asked questions **Q: What is development finance?** faq-id: 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. **Q: Can I get development finance with no experience?** faq-id: 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. **Q: How much can I borrow?** faq-id: how-much-can-i-borrow-d2f0a9 On a residential scheme, a first-time developer can typically borrow up to 75% of gross development value and up to 90% of total project cost on the cases we arrange, and mezzanine structures can reach 100% of cost on strong schemes. Commercial schemes usually run nearer 70% of GDV with the same 90% cost cap on the cases we arrange, and pure commercial ground-up schemes usually 65%. **Q: What does development finance cost upfront?** faq-id: what-does-development-finance-cost-upfront Arrangement fees, valuation fees, legal fees and monitoring surveyor (QS) fees apply. Interest is usually [rolled up](https://mortgagelane.com/definitions#def-rolled-up-interest) and repaid at exit rather than paid monthly. **Q: What is a drawdown?** faq-id: what-is-a-drawdown A drawdown is a staged release of the loan as the project reaches milestones. A [monitoring surveyor](https://mortgagelane.com/definitions#def-monitoring-surveyor) confirms progress before each release, so fewer, larger drawdowns keep monitoring costs down. **Q: What is Gross Development Value (GDV)?** faq-id: 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. **Q: What is a personal guarantee?** faq-id: what-is-a-personal-guarantee A personal guarantee is a director's or borrower's commitment to repay personally if the borrowing company cannot. On development finance, guarantees vary by lender: some take none, others a guarantee of around 25% to 50% of the loan. In our experience they are usually required unless the loan is under 50% of gross development value and £1 million or more, and the level is often negotiable. **Q: Can development finance cover the land purchase?** faq-id: can-development-finance-cover-the-land-purchase Yes. The facility can fund part of the land within the overall package, provided the purchase is integral to the scheme. In our experience the day-one land advance is around 70% of the land value with specialist lenders and around 40% on the high street, with the developer funding the balance. Land-only holding ahead of a scheme is usually a [land bridging loan](https://mortgagelane.com/short-term-finance/land-bridging-loans) instead. **Q: What is the typical term?** faq-id: what-is-the-typical-term On the cases we arrange, development facilities run for up to 36 months, sized to the build programme plus a sales or refinance window. **Q: What is the exit?** faq-id: what-is-the-exit The exit is the sale of the completed units or a refinance onto term lending: buy to let for retained units, or [development exit finance](https://mortgagelane.com/short-term-finance/development-exit-finance) to bridge the sales period at a lower rate once the build is complete. **Q: How long does approval take?** faq-id: how-long-does-approval-take It depends on the scheme's complexity and on how complete the application is (planning documents, drawings, costings, timeline and exit evidence). **Q: How can Mortgage Lane help a first-time developer?** faq-id: how-can-mortgage-lane-help-a-first-time-developer We place first-time schemes with lenders that do not require a track record, prepare the application and structure the funding. ## Talk it through with an adviser Let’s talk property finance ## Contact us **Call our team:** [+44 333 231 8206](tel:+443332318206) **Email us:** [enquiries@mortgagelane.com](mailto:enquiries@mortgagelane.com) **Opening hours:** Monday to Friday, 9am–6pm Closed Saturday and Sunday Your enquiry goes to our team, who will get in touch to discuss your next steps. 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