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Development Finance Calculator

Development finance can be utilised to raise funds for constructing, converting, and refurbishing buildings as well any land purchase required. 

It is a short-term financial product designed to cover costs throughout the build.

Property Finance Partners can potentially fund up to 85% of the land cost and all the build costs, on the condition that the total of the loan is not more than 85% of the GDV. 

However, these conditions are specialist and involve higher interest rates and exit fees.

In order to get the best out of development finance, it is recommended to keep loans down to 65% of the land costs and all of the building costs.

The development finance calculator will help you understand the development costs.

Our Development Finance Calculator Will Help You Establish What You Can Get

In order to calculate development finance, the following information is required:

Total Net Loan Amount Required:

The complete figure needed by the borrower and includes the day one release to assist them in buying the site as well as all the other releases. 

This does not include any interest charges or finance – this figure is solely the amount you require following these costs.

Before using a financial product, it is important you thoroughly plan the project, to ensure you calculate this figure accurately.

Loan Term Needed:

The time the loan is required in months needs to be entered into the calculator. It would help if you decided what period you will require the funds for. Lenders may be prepared to agree to loan terms spanning over a few years. 

Purchase Cost: 

If the project site is being bought, you need to put in the amount of money needed to buy it. 

Alternatively, insert the residual value if the development site is already owned. This calculation helps calculate how much profit can be generated from the development. 

Stamp Duty: 

Please insert the figure of stamp duty due to being paid or considered. If you are unsure of this figure, here is also a stamp duty calculator available below.

What you will need to pay varies between the devolved nations. There currently reduced rates for individuals purchasing a home in England and Northern Ireland. Buyers will pay less Stamp Duty Land Tax (SDTL) up to 31 March 2021.

If your principal residence is below £500,000 in value, you will not be required to pay Stamp Duty. 

In the event you buy another property you will be required to pay an extra 3% in Stamp Duty as well as the reconsidered charges for each band. 

The higher rate applies to properties purchased for £40,000 or more.

Alternatively, to stamp duty, property bought in Scotland will be subject to Land and Buildings Transaction Tax (LBTT) and Land Transaction Tax (LTT) in Wales. 

Figure Available From Borrower: 

Please put into the calculator, how much you the borrower, are planning to invest in the development.

Total Project Cost:

In this section, please enter a complete figure of required funds for the complete build and must involve all the costs of the project excluding the cost of the land, stamp duty and any finance fees.

Total Gross Development Value:

This section requires the forecasted GDV after works are finished. Alternatively, if the intention is to sell before it is finished, what is the value when you plan to sell. What do you think the selling price for the property will be?

Prime Funding: 

Payment from development finance begins with the initial release. 

Please enter how much money you will need from your first loan payment. Also known as the initial release.

Interest Calculated either per annum or per month:

This figure will default to per annum, but can be adjusted to per month.

Interest Rate: 

The calculator will automatically change this to 7% per annum. 

These are typically the most significant expense attached to development finance and average between 6-9%. 

The lower the risk your application carries, the lower your interest rates are likely to be. 

The ‘most robust’ applications come from developers with a portfolio and a considerable amount to pay into the loan. 

Nevertheless, the lowest interest rate is not necessarily the greatest. A low rate loan is not always cheapest.

Further Releases: 

Please insert the amount needed and when the money will be required. 

Interest is only applicable to money that has already been made available to the individuals with the loan. 

It is advised that you experiment with this part of the calculator. Altering the totals will affect the interest charges and ultimately, the potential profit of a project.


Our calculator will also be able to work out some of the fees involved with development finance. The exact interest rates and fees will be dependent on your lender and loan plan.

The facility fee and the exit fee are the most pertinent to consider. Generally, the facility fee is a proportion of the financial product and if applicable, the exit fee, which is a proportion of the gross loan product or the GDV.

Property development finance usually involves a range of other fees including legal, quantity surveyor fees and administration charges. 

The calculator will give an estimate as these fees vary from lender to lender.

Exit Fee: 

This figure defaults to 1% of the gross loan product; however, this can be altered to any proportional amount of the gross loan facility or the gross development value.

The method used to calculate this fee can change the total costs significantly.

Facility Fee: 

In the calculator, this defaults to 1%, but this can be altered. This is the charge made by lenders for arranging the loan and is generally around 1-3% of the loan total. 

Payment for this is typically taken once the loan period has finished. The fee may be worked out against the gross loan or the net loan.

Other costs:

It is valuable to include all the available information in the calculation, to generate the most accurate development profit and return calculations.

This section should be used to enter any other costs connected to the build, that were not considered in the ‘Total Build Cost’ earlier on.

VAT Returns:

If you can claim any VAT back, the relevant information should be entered in this field. If VAT can be claimed back, the total costs of the development will be less.


Our calculator will generate the results in a similar structure as follows.

Monthly Interest Charges – the total at the end of each month will be displayed. The figure will consider the facility fee, loan releases and interest charges.

Net Loan Amount:

To include the first and subsequent pay-outs of the net loan amount requested.

Interest Charges:

The interest to be charged in its entirety.

Gross Loan Amount:

Total net loan amount plus the facility fee plus the interest charges.

Redemption Loan Amount:

This total is the gross loan amount plus the exit fee.

Valuation Costs:

An estimation will be given

This sum is taken to employ an RICS surveyor to complete a survey and place a value on the development site. 

This includes both the current value of the site and GDV (the value once the project is complete). 

A surveyor will also provide feedback on the likely value of the projects once it is completed, based on demand and provide on advice on when will be best to sell. This fee is usually only charged once. 

QS Costs: 

An estimation will be given. 

Lenders will be keen to keep an eye on your project as it progresses and will employ a quantity surveyor to do this regularly. 

The quantity surveyor will give feedback about the cost and progress of your build. This information will shape your drawdown schedule. The quantity surveyor will also visit throughout the build. 

Lender Legal Costs: 

An estimate will be displayed by the calculator.  

Legal charges will be set by your lawyer, as payment for dealing with the legal part of the loan for you. They are usually directly billed to the borrower. 

Other costs: 

The calculator will supply information about any other costs.

These may include a drawdown fee which could potentially be taken every time a drawdown is taken. 

Some lenders and brokers will charge admin and banking fees to cover these costs. It is pertinent also to show them in these calculations as they do add up. 

Additionally, the software will issue further helpful information, to help draw a picture of how profitable the project may be, with and without the cost of financial support.

Ground Up Development Finance Example 

An area of land with the required permissions to build eight, detached houses with three bedrooms each. The plot is on the market for £500,000 and the cost to construct the properties will be £800,000. For purposes of the example, the property is in England.

Presuming the developer is experienced and intending to sell the completed homes on the open market. The figures are as follows:

Purchase Price£500,000
Build Costs£800,000
Gross Development Value£4,000,000

The estimated value of every property is £500,000 totalling a Gross Development Value (GDV) of (8 x £500,000) £2,000,000

The property developer must generate enough funds to buy the land and pay for all the build costs if they can. Specialist lenders can lend up to 70% for buying the land and cover all the building costs, on the condition that borrowing is below 90% of the whole cost of the development. 

Initial Release£500,000
70% of Initial Release£350,000
Build Costs£800,000
Total Loan£1,150,000

The first payment will enable the developer to buy the land and begin the project. The client can borrow within 70/100 percent and have access to £1,150,000.

Total Project Cost£1,300,000
90% of Total Project Costs£1,150,000
Maximum Loan£1,150,000

The amount needed to finish buying the land would be made available up front, and the rest of the loan would be provided over the loan’s agreed term. 

Lastly, it is important to check that the loan is compatible with the lender’s gross development value.

For this example, the lender lets the property developer borrow as much as 75% GDV. 

Gross Development Value£4,000,000
Loan Amount£1,150,000
Loan to GDV28.75%

The loan would be awarded and deemed suitable by the lender. 

How Do Lenders Calculate How Big A Loan You Can Be Awarded?

Lenders will calculate based on three factors:

Day One Advance – Also known as the prime funding or initial release, this is the amount the lender is prepared to pay out at the beginning of the loan. 

Loan to cost:

This figure represents the total the lender is prepared to advance as a proportion of the complete project cost. It is typically between 80-90% of the final cost of the project.

Loan to Gross Development Value: 

This total demonstrates the most the lender is prepared to pay as a proportion of the value of the completed project. 

Development Finance Repayment 

Before a lender awards you a loan, they will be keen to see a clear exit loan from you. 

It is beneficial for the borrower to pay it back quickly too, as any delays may mean they face extra interest charges. Development finance is most commonly repaid in the following ways:

Selling the complete property or site. 

A developer may sell the finished development. They might sell the development as a whole or as individual units.

The developer may build to rent and refinance the finished development using another financial product, which allows them to place the new development on the rental market.

Alternatively, whoever is in charge of the development may decide on a combination of the above, selling some properties and putting some on the rental market for investment purposes.

Development Exit Finance 

Development exit finance is available on the market to help developers with repaying development finance before the sale of the project/build they have just finished. 

This is a popular option for several reasons:

It cuts costs and therefore increases profits made on the project – exit finance is generally cheaper in comparison to development finance.

It can support you financially, especially if your development finance loan is finishing and will do before your property sale.

It allows you to begin your next property development project.

Considerations Before Applying 

Financial Implications 

Like with any financial product, it important to consider the cost involved with property development loans.

Despite the fact they are a way to access funds, they will also cost you and reduce overall profit. Financed developments make less money. 

Lenders Will Want Access To The Site 

Before giving you the release of the loan; the lender will want to see the project throughout various points of the build. These visits will need to be considered in your schedule. 

You Will Need All The Information For The Application 

It can take quite some time to get all the information you need for the application. Lenders will be keen to see everything from planning permission to costings.

If you need help in using the development finance calculator, please contact Property Finance Partners.

You can also try our bridging loan calculator

Development Finance Calculator
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