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Research & Acquisition: The first step is identifying a property or land with development potential. After securing planning permission, the developer purchases the property, often with the help of bridging finance or an initial tranche of development finance. This initial phase sets the foundation for the project.
Development Planning: Next, the developer works with architects, planners, and contractors to create a detailed plan and budget. This stage involves estimating costs, timelines, and the potential value of the finished project (GDV – Gross Development Value). A key part of this phase is outlining an exit strategy—how the loan will be repaid—whether through the sale of the completed development or refinancing into a long-term mortgage.
Funding & Construction: Property development loans are typically released in tranches, meaning the total loan is broken into instalments. Lenders usually require the developer to fund the initial stage—known as hurt money—demonstrating their commitment to the project. This first tranche often covers the land purchase or initial construction costs.
Once the first stage is completed and signed off by a surveyor or project manager, the lender will release further tranches as the project progresses. Most property development loans are broken into 3-5 tranches, though this can vary depending on the size and complexity of the development. These staged payments help ensure that the project remains on track, with the lender only releasing funds once each milestone is completed, reducing risk and improving cash flow management.
Completion & Exit: Once the project is finished, the developer moves on to the exit. If the plan is to sell, the property is marketed and sold, with the development finance repaid from the proceeds. Alternatively, the developer might refinance with a long-term mortgage and rent out the property for ongoing income. Regardless of the strategy, the exit is crucial as it is the point at which the development loan must be repaid in full.
Possible Exits:
Property development finance is generally divided into a series of tranches to ensure funds are released in line with project milestones. The loan is split into multiple instalments, typically 3-5 tranches, each released as specific phases of the development are completed. This structure reduces the lender’s risk by ensuring funds are only made available as the project progresses.
Lenders often require the developer to fund the first tranche—known as hurt money—out of their own pocket. This initial investment demonstrates the developer’s financial commitment to the project. After this, subsequent tranches are released by the lender at key stages, such as the completion of foundational work, structural elements, and final touches like landscaping or interior work. Each tranche is only disbursed once a professional surveyor confirms that the previous stage is completed according to plan.
This phased release of funds ensures the developer has access to necessary capital without taking on the full loan upfront, while also keeping the project accountable and moving forward efficiently.
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You’ll share basic information about you, your business and finance requirements. Either apply online or call us on 0161 791 4601.
We’ll ask for some more information regarding your businesses and tailor the best solution to meet your needs.
Once approved, we’ll get funds to your preferred business bank account or pay a supplier on your behalf.
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Finspire Finance Ltd is an independent finance brokerage and not a lender, as such we can introduce you to a wide range of finance providers depending on your requirements and circumstances. We are not independent finance advisors and so are unable to provide you with independent finance advice. Finspire Finance Ltd may receive payment(s) or other benefit from the finance provider if you decide to enter into an agreement with them. We aim to provide our customers with the highest standards of service. If our service fails to meet your requirements, we will endeavour to find a resolution.
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