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Development finance calculator

What a development facility really costs, drawn down the way it is actually drawn

Every simple development calculator gets the same thing wrong. The build tranche is not outstanding for the whole term: it is drawn monthly against measured progress, so the interest on it is roughly half what a flat calculation suggests. Charging the full facility for the full term overstates the cost by a third on a typical scheme, and pricing a site off that number loses deals that were viable. This draws it down properly and shows both figures.

For: Ground up, or a conversion drawn down against the work

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The scheme
£
£
Construction and professional fees. Price it on the new build or conversion calculator rather than guessing: the lender's monitoring surveyor will price it properly and will say so if you are light.
£
What the finished scheme sells for in total. The lender's valuer sets this, not you, and the facility is capped against their figure.
mo
Build plus the sales period. Take longer than you think: the interest is rolled up and every extra month compounds.
mo
This is what decides the interest, because the build tranche is drawn across it rather than on day one.
The facility
%
0.65% to 0.90% a month for an established developer on a residential scheme, roughly 8% to 13% a year. Higher leverage, less experience or a complex structure reaches 1.10% and above. Lenders price at base rate plus three to five points.
%
Capped separately at 60% to 70% of site value. This is the number that decides how much of your own money goes in on completion day, and it is the one worth negotiating hardest.
%
Usually 100% of the build, drawn monthly in arrears against measured progress. In arrears means you pay the trades first and are reimbursed after the monitoring surveyor has been, so you need working capital for one stage at all times.
%
%
Is the exit fee charged on GDV?
On the loan, which is the cheaper of the two bases. Check the offer letter: it is frequently on GDV instead and the difference is real money.
£
Appointed by the lender and paid by you, for an initial appraisal and a visit before every drawdown. Around £750 to £1,500 a visit.
£
You pay the lender's solicitor as well as your own on every development facility.
Lender caps
Two ceilings, and the tighter of the two decides the facility.
Have you developed before?
A track record with completed schemes gets the standard caps and the better end of the rate range.
%
Most lenders advance up to 65% of GDV, with some reaching 70% for stronger applications. Challenger banks have re-entered the 70% bracket with stretched senior products.
%
85% to 90% of total cost, subject to the GDV cap taking precedence. So you fund at least 10% to 15% of costs from equity.
If the programme slips£22,644
mo
The commonest outcome on a first scheme. Interest keeps rolling up, an extension fee is payable, and the lender is under no obligation to grant one.
Cost of the facility across the whole scheme£153,888£107,248 of rolled up interest, £17,760 arrangement, £8,880 exit and £20,000 of monitoring and legals. A flat calculation on the whole facility for the whole term would show £135,864 of interest, which is £28,616 more than the real figure: the build is drawn in stages, so most of it is only outstanding for part of the term. All in, that is 17.3% of the facility across 18 months.
£888,000Facility
£149,760Your equity
£296,112Profit
20.4%Profit on GDV
197.7%Return on equity
Land22%Build47%Finance11%Profit20%
Above what the lender will advance£145,248
The facility plus rolled up interest reaches £995,248, against a cap of £850,000 set by 85% of cost. Either the day one land advance comes down, or you put more equity in, or the scheme needs a mezzanine layer on top.
How it is drawn
Day one, against the land£208,000
65% of £320,000. You fund the other £112,000 on completion day, plus the stamp duty and the fees.
Build tranche£680,000
Drawn across 12 months in arrears against measured progress. You pay each stage first and are reimbursed after the monitoring surveyor signs it off, so budget working capital for one stage at all times.
Total facility£888,000
88.8% of cost and 68.6% of GDV once the rolled up interest is counted.
What it costs
Interest on the land advance£34,231
Outstanding for the whole 18 months and compounding on itself.
Interest on the build tranche£73,018
Drawn in 12 monthly slices, so each one is outstanding for a different length of time. This is the line every simple calculator gets wrong.
Total rolled up interest£107,248
A flat calculation on the whole facility for the whole term would show £135,864. The difference of £28,616 is why so many first appraisals wrongly conclude a scheme is unfundable.
Arrangement fee£17,760
Exit fee£8,880
Charged on the facility.
Monitoring and legals£20,000
What is left
Total cost£1,153,888
£320,000 land, £680,000 build and £153,888 of finance.
Your equity£149,760
The land you fund yourself, the arrangement fee, and the monitoring and legal costs. Before the working capital you need to run one build stage ahead of the drawdowns.
Profit£296,112
Profit on GDV20.4%
At or above the 17.5% to 20% most development lenders require, which is also the RICS viability benchmark.
Profit on cost25.7%
Twenty five per cent on cost is roughly equivalent to twenty per cent on GDV, and it is the figure a builder is more likely to quote at you.
Return on your equity197.7%
131.8% annualised over 18 months. Gearing is what turns a 20% scheme margin into this, and it works exactly as hard in the other direction.
If it runs 3 months late
Extra interest£22,644
Profit after the overrun£273,468
18.9% on GDV, plus an extension fee of around £8,880. A first scheme running three months late is normal rather than exceptional, so this is the case to price against.
Where these figures come from

Rates. UK development finance runs 0.65% to 1.10% a month in 2026, roughly 8% to 13% a year. Established developers on residential ground-up schemes sit at 0.65% to 0.90%; higher leverage, less experience or a complex structure reaches 1.10% and above. Lenders price at base rate plus three to five points on a monthly rolled basis.

Caps. Most lenders advance up to 65% of GDV, some to 70% for stronger applications, and 85% to 90% of total cost with the GDV cap taking precedence. The day one land advance is capped separately at 60% to 70% of site value. First-time developers typically face 85% loan to cost and 65% loan to GDV rather than the standard limits, plus higher rates and more intensive monitoring.

Profit. Most development lenders require a projected profit of 17.5% to 20% on gross development value, which is also the RICS viability benchmark for a residential scheme.

The drawdown model. The land advance is treated as outstanding for the full term and compounding. The build tranche is split into equal monthly slices across the build period, each compounding for the time it is actually outstanding, and the results are summed rather than averaged.

Interest is rolled up rather than serviced on almost every development facility, so it compounds and it comes out of the profit at the end rather than out of cash flow along the way. Build drawdowns are made in arrears against a monitoring surveyor's certificate, which means you fund each stage before you are reimbursed for it: a scheme with no working capital stalls even with a fully agreed facility. The lender's valuer sets the GDV, not you, and a valuation below your figure tightens both caps at once. An overrun is the commonest thing that goes wrong and the lender is under no obligation to extend. Development finance is arranged through a regulated broker or lender. An estimate, not advice.

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