A how to guide for the development finance journey

The journey of a development finance deal can be challenging and complex in terms of planning and infrastructure. John Hardman (pictured), head of sales at Bridging Finance Solutions (BFS), offers his insight into the development finance journey.

When considering a development finance deal at initial enquiry stage, a lender should be presented with an overview of the project including projected costs (as well as breakdown of build costs) and GDV (end value), outline feasibility study, plans and planning detail.

By providing this level of information at the outset, we are able to quickly access how viable a scheme is and whether this is something that can be progressed. Time is often critical for a development deal, so the more details that we can be presented up front, the quicker and more accurately the lender is able to respond.

Feasibility study

It’s important to consider wider details around the project in terms of feasibility. Look at the infrastructure of the surrounding area – access to transport, employment opportunities, leisure and other amenities. All of these factors will influence the level of demand for properties in that area which in turn will ultimately impact the end value and sale times.

Understanding the local and wider market can’t be underestimated when considering an end value. Look at values of similar properties and gather accurate comparisons as well as prices realised. Building a picture of your perfect buyer can also prove to be a helpful part of your wider strategy.

Projected costs

Clear costs projections are obviously crucial. A breakdown of construction costs, divided into stages or phases including trades as well as costs incurred through professional services should be detailed. You will need to provide evidence of how much has been personally invested into the scheme to demonstrate your own financial commitment against the loan amount.

Building a professional team

Using a professional team such as valuers and solicitors that are well versed in bridging and development finance can heavily influence the outcome and profitability of any scheme. Their ability to understand, react and advise appropriately will prove to be a major asset.

Appointing an experienced and reputable contractor with relevant accreditations (or independent trades) will also support any application and give you confidence as the project gathers momentum. Ask for evidence of previously completed projects and even visit them in person before any appointment and if possible obtain client feedback.

Lending journey

Quantity Surveyor

The lender typically appoints the QS who will complete a feasibility report before drawdown and comment on costs, build times etc to manage expectations of the client and to give the lender comfort that the scheme will be seen through to completion within budget. Some lenders insist on monthly visits whilst BFS allow the client to dictate frequency of visits whenever they need more cash which reduces costs.


The role of the underwriter is a double-sided one in as much as they aim to protect both client and lender. The underwriter will pull together the valuation report, QS report and the client’s own paperwork including plans, cashflow and build program. The underwriter will then provide the client with a deal structured to ensure that 100% of build costs are covered.

In addition, if there are any warning signs such as unrealistic build costs or sale times the underwriter will make the client aware and suggest ways to mitigate such factors. Once the client is happy this will be submitted to solicitors to move towards completion.


A solicitor is appointed at the final stage of the process, once the lender has the valuation and QS report, and has completed the underwriting due diligence. A solicitor ensures that security is in place for the client and lender’s loan carrying out all legal due diligence until the point at which the deal is completed. They will also ensure relevant warranties and contracts from all third parties are correctly executed.

There are multiple elements/parties to consider when planning a development finance scheme – by being aware of all of the necessary components beforehand, and with the right professional support, your deal has a strong chance of success!


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