We are Development Finance Brokers

Guide to development funding lenders and costs

Lenders in this particular sector of commercial finance tend to fall into three tiers;
our role is to help our clients choose the right lender for them and their specific project.

Tier 1: Institutional Lenders

This tier would include the High Street banks, and therefore the cheapest tier but the least “aggressive” in terms of loan to cost and indeed general appetite. It remains difficult to access such lenders for most developers and some banks will only consider schemes from existing clients, or via established brokers with a requirement for pre-sales or pre-lets.


  • Will lend up to 50 percent of GDV (or 60 percent of costs)
  • Typical charges include a 1.5% – 2% arrangement fee and a possible exit fee
  • Interest rates from circa 3 percent over bank base

Tier 2: Merchant Banks

These are the specialist banks which may have geographically restricted areas. They typically lend to well established property development companies, with clean credit profiles.


  • Up to 50 – 60 percent of GDV
  • Arrangement fees typically 1.5% – 2% with exit fees based on the loan amount or possibly GDV
  • Interest rates from 6% -10% per annum

Tier 3: Specialist Lenders

This tier includes a number of independent financial organisations which will accommodate the developers who fall short of ticking all the boxes for Tiers 1 & 2. Geographically less restricted and more sympathetic to speculative builds (within certain parameters). In addition to this, some mild adverse credit can be considered.


  • Up to 70 percent of GDV (or 85 percent of costs)
  • Arrangement fees typically 2% – 2.5%, may or may not have exit fees
  • Interest rates 12% – 18% per annum,

There is a fourth tier better known as Private Lenders/Private Investors who tend to be wealthy individuals who have development experience themselves, and will consider Joint Venture, equity participation, and 100 percent funding if the project suits. They will consider much more speculative scenarios with non-status developers or those with very limited, or in some cases no development experience. They may also be prepared to support an application to a lender and be part of the overall finance required for a smaller share of the profit.

If we can help we will tell you how…
If we can’t we will tell you why




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At CFB UK we see our role is helping you to make the right choice

Call now on 0800 999 2015 to discuss your project, with an experienced broker.

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