Top 10 Lenders to Secure £850,000 Development Finance in 2026

Development finance for an £850,000 project provides staged funding to cover land acquisition and build costs. Lenders release funds in tranches as each construction milestone is reached, rather than as a single lump sum. You typically draw down an initial tranche to purchase or refinance the site, followed by subsequent payments after surveyor sign-off at key stages. Interest is usually charged only on the funds drawn, not on the full facility, which helps manage costs during the build phase. The loan is repaid upon sale of the completed units or through refinancing onto a longer-term product such as a commercial mortgage.

Eligibility varies by lender, but most look for applicants with a proven track record in property development. You will typically need to demonstrate experience completing similar-scale projects, provide a detailed project plan with costings, and show that planning permission is either granted or likely. Lenders also assess the projected gross development value (GDV) and expect a healthy profit margin. Personal credit history matters, though development finance is more asset-focused than mainstream lending. Many lenders require a personal guarantee or debenture over the borrowing company. First-time developers may be considered but often face stricter terms and lower loan-to-GDV ratios.

Development finance rates in 2026 vary based on the project risk, your experience, and broader market conditions. Interest is commonly charged monthly, with rates typically falling between 0.5% and 1.2% per month. Terms usually run from 12 to 24 months, giving enough time to complete construction and exit. Most lenders will advance up to 65–70% of GDV or up to 80–90% of total project costs, though the exact ratio depends on the lender and project specifics. Arrangement fees, legal costs, and exit fees are standard and should be factored into your overall funding calculation. Always request a full breakdown of all costs before committing.

Both can fund property projects, but they serve different purposes. Development finance is purpose-built for ground-up construction and major refurbishment, releasing funds in stages as work progresses. A bridging loan provides a single upfront lump sum, which makes it better suited to light refurbishment or purchasing a property at auction where you need speed rather than staged payments. Bridging is typically shorter-term, often 6 to 12 months, and may carry higher monthly interest. For an £850,000 development involving significant building work, a dedicated development facility is usually more appropriate and cost-effective than a bridge.

A secured business loan is typically a straightforward loan secured against an asset, repaid in regular instalments over a fixed term. It lacks the staged drawdown mechanism that makes development finance so useful for construction projects. A commercial mortgage is designed for completed, income-generating properties and involves long-term repayment over 5 to 25 years. Neither product is structured to fund a building project from the ground up. Development finance sits between them: it provides construction funding with flexible drawdowns and is then commonly refinanced onto a commercial mortgage once the project is complete and generating income.

Look beyond headline rates and consider the lender's experience in your type of project. Check their loan-to-GDV limits, how quickly they process drawdowns, and whether they use in-house surveyors or external panels, as this affects speed. Ask about their approach to cost overruns: some lenders will fund reasonable overruns, others will not. Understand all fees including arrangement fees, exit fees, and monitoring costs. A lender with a strong track record in the UK development market and clear communication throughout the process is worth more than a marginally lower rate. Check reviews and speak to other developers if possible. Also confirm they are FCA-authorised and transparent about their terms.