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Development Finance Applications - How to Get Approved

Comprehensive guidance to ensure your development finance application stands the best chances of approval, with advice around each element of the eligibility assessment process.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2024-06-15
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Development Finance Applications - How to Get Approved

Submitting a development finance application can be nerve-wracking; if you've set your sights on a project and been turned down for the borrowing you need, it can be a huge blow.

The trick is to ensure that all relevant information is included clearly and understandably. The fewer questions your lender is left with, the smoother the application process!

Preparation is essential, as a mortgage lender considering a new development finance application will be more likely to approve the request if they feel the planning and documentation represent a low-risk investment.

Conversely, an application that doesn't include contingency budgets or doesn't explain the exit strategy (more on that shortly!) may pose too much risk or be viewed as an unviable project.

This guide will explain our top tips for application approval to help you achieve the most competitive development finance rates and select suitable lenders for your project.

For further advice and assistance, contact the mortgage advisors team on 0330 304 3040 or email us at [email protected].

Make Sure the Data and Figures are Accurate on Development Finance UK Applications

It seems obvious, but it's common to use projections and estimates in a development finance application.

Those estimates are always subject to professional or personal judgement - but your development finance UK lender will want to see how you've arrived at predictions to ensure they're based on sound, quantifiable figures.

Every budget estimate you use in your development financing projects should meet both of the following requirements:

  • Use reliable, quantifiable estimates where exact figures are not known.
  • Make sure all the figures add up - triple check your sums.

Multiple mistakes on an initial application significantly increase the chances of rejection, so check your data thoroughly.

That means evidencing sources, such as quotes from contractors, or using published information such as property sale prices achieved for similar developments in the local area.

Suppose you have included this information and breakdowns to explain how you've come up with a predicted cost or anticipated valuation. In that case, you will assure your lender that the pricing expectations are likely to be close to the actual costs.

  • Loan details
  • help If the land was purchased within the last 2 years for less than the current land value, we will lend up to 65% of this figure
  • Initial Loan (day 1) must be less than 65% of Initial Land Value (day 1)
  • help Minimum 6 months
  • The LTGDV is higher than 70%. Please review the Initial Loan (day 1), construction costs and gross development value fields.
Instant Results
Initial Loan (day 1) 0
Total Loan Amount 0
Day 1 (LTV) 0
Margins at 0
Build Term (months) 0
Minimum Term (months) 0
Assumed arrangement fee @2% 0
Admin fee 0
Exit fee 0
Net Day 1 Advance (after deductions)* 0
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Present your Application in an Understandable Way Before Financing Development Projects

If you are trying to explain budgets and figures, this needs to be laid out in a simple way to read.

Scribbled notes, jumbled figures and vague descriptions are very likely to result in a rejection.

There are many ways to construct your development finance application to look professional, and it is much easier for a lender to evaluate.

  • Use a spreadsheet to present figures.
  • Make sure drawings or illustrations are labelled and marked.
  • Spell check your text and ensure it is accurate.

Development finance rates depend heavily on the quality of your application. Therefore, it is well worth spending time finessing your application to ensure it's approved and you are offered attractive rates.

Give Revolution Brokers a call if you need any support with putting your application together.

Our highly experienced consultants have years of knowledge about the best way to present your development finance plans. They are on hand to provide bespoke advice to ensure your application clearly demonstrates your development aspirations.

Don't Overstate Your Development Experience of Housing Development Finance.

It's normal to want to exaggerate your experience to improve your chances of approval - but lenders will verify any experience you mention.

They will usually ask for property details and images, so the lender will find out if you don't disclose that it is your first development.

False claims on an application will be an immediate rejection.

While experienced developers usually have a more straightforward application process, you won't always be automatically turned down if you have a good development project in mind. However, the lender needs to see the potential to make a sizable return on their investment.

However, exaggerating your experience will almost certainly pose a substantial problem, so it's essential to be honest and transparent in all the information you provide.

Don't forget that you don't need to have a full-scale commercial build under your belt to demonstrate some level of development experience!

Even domestic renovation projects involve a great deal of project management and budget control, so be sure to include all relevant experience that will contribute to your application.

Be Realistic with your Estimates for Development Finance Rates

As with experience, a lender will check and evaluate everything on your application - including possible sale prices.

If a project looks to have excellent margins, it will be of more interest.

Still, the lender will look for the valuations of similar properties in the area and quickly identify if the projections given are not viable.

Development finance projects with a substantial profit margin estimate might look more attractive on paper. Still, any lender will look to verify the risk profile of the development, including research into the primary figures included on your application.

It's essential to do your homework and provide three examples of other property sales or listings that indicate what you expect to achieve for the sale of your completed build.

You can use a range of properties as evidence. Still, they should be as close in design to your project as possible and always in the local area, given the significant property market pricing variations in different UK regions.

Work Out Your Budget Thoroughly Through a Property Developer Finance Calculator

Lenders will need to know the overall build costs and how you will spread those costs over the project duration.

Break down the costs month by month right from the start, and a lender will have more confidence that you will be able to manage the cash flow.

For example, a lender will not be content with one overall budget figure. They'll want to know:

  • How that cost is arrived at, and what you expect to draw down from your development finance facility at each significant stage of the build.
  • How much you are investing into each part of the process, and then how much you're expecting to borrow from your development finance lender.
  • When each stage is expected to be complete - the project lender will usually require an independent valuation at each step to confirm the progress is on schedule and that the requisite works have finished before they release the next batch of funds.
  • Who will be carrying out the work? Especially if you're new to developing properties, including details of experienced contractors, architects and surveyors will strengthen your application.

If you're in any doubt as to your total borrowing required, it's wise to go back to the drawing board before you approach a development finance lender.

Clear budgets, precise schedules of work and credentials of the professionals who will be working with you are all critical to improving your chances of approval.

By following these steps, you present a thorough, accurate and viable development finance application that stands the best chance of approval and secure competitive rates that won't eat into your development project profits.

For more support with submitting your application, or identifying the suitable lenders to apply to, contact Revolution Brokers on 0330 304 3040 or email us at [email protected].

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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