What Is 100% Development Finance and How Can It Benefit You?

You’ve always dreamed of becoming a property developer, but let’s be honest—finding the money to start is daunting. 

Maybe you’ve spotted the perfect plot of land or an old building begging for a transformation, but your bank account says otherwise. 

That’s where 100% development finance can be a game-changer for you.

This type of funding means you could launch your project without having to scrape together all the cash upfront. 

In this article, we’ll explain how it works, how it can help you get started, and what you need to know to make the most of it. 

If you’re eager to turn your ideas into a reality, this is exactly where you should begin.

What is 100% Development Finance?

100% development finance, sometimes called joint venture development finance, is a way for property developers to get all the money they need for a project.

If you’re new to developing properties or don’t have enough money to start, this type of finance can help. 

The lender gives you all the funds you need, from buying the land to paying for the construction work. This means you don’t have to use your own money.

This type of finance works best for big projects, usually worth over £1 million, that are expected to make at least 25% in profits.

When the project is finished, the property can be sold or refinanced. The profits are then shared between you and the lender. 

Usually, you split the profits evenly (50/50), but some lenders might let you pay less interest in exchange for giving them a smaller share of the profits.

The lender isn’t just there to give money—they also help manage the project and often use something called a Special Purpose Vehicle (SPV). 

An SPV is like a separate company set up just for the project to keep all the money and expenses organised in one place.

Are You Eligible for 100% Development Finance?

Before you apply for this type of financing, lenders will want to see if you meet certain criteria. Here’s what they usually check:

Proven Experience

Lenders want to work with developers who’ve shown they can successfully complete projects like yours. 

If you’re new to property development or working on something small, it might be harder to qualify. Having experience helps reassure lenders that you know what you’re doing and can deliver results.

Solid Profit Margins

Lenders want to see that your project will make a good profit. To qualify, you’ll need a profit margin of at least 25%. This means your profit should be 25% of the selling price.

For example, if it costs £300,000 to build a property and you sell it for £400,000, you’ve made £100,000 in profit (£400,000 minus £300,000). 

To calculate the profit margin, divide your profit (£100,000) by the selling price (£400,000). That gives you 0.25, or 25%.

This shows lenders your project is likely to succeed and make enough money to be worth their support.

Planning Permission

You’ll need full planning permission to qualify. This means your project has been approved by local authorities and follows all the rules. 

It also gives lenders confidence that there won’t be delays or unexpected problems later.

Project Value (GDV)

Lenders prefer projects with a high Gross Development Value (GDV), which is the total value of the property when it’s finished. 

To qualify, your project’s GDV usually needs to be at least £1 million. If the GDV is higher—like £2 million or more—it makes your project even more appealing to lenders.

Personal Guarantee

Most lenders will ask for a personal guarantee. This is your promise to cover part of the loan if something goes wrong.

It’s usually capped at 20% of the total loan amount, meaning you’d only be responsible for paying back up to 20% if the project doesn’t work out. For example, if the loan is £500,000, your personal guarantee would be £100,000. 

This gives lenders extra security without putting you on the hook for the entire loan. In simple terms, it’s like sharing some of the risk with the lender.

If you meet these requirements, 100% development finance could be a fantastic way to fund your project. 

But why choose this financing option in the first place? Let’s look at the key benefits.

Why Choose 100% Development Finance? 

Here’s why it’s worth considering:

• Quick Access to Funds. This type of financing gives you the money you need right away. You won’t have to wait around or miss out on great opportunities just because you don’t have enough cash upfront.
• Faster Project Completion. Having financial support means you can avoid delays that usually come with sorting out personal funds. You can move quickly, snap up good deals, and start your project before others beat you to it.
• Shared Risks and Rewards. Since you’ll share the profits with your lender, both of you have a reason to make the project successful. This teamwork can lower risks and help keep everything on track.
• A Strong Partnership. With 100% development finance, it’s not just about the money. You’ll also benefit from the lender’s knowledge, connections, and market insights, making it easier to achieve your goals.
• Save Your Own Money. One of the best parts? You don’t have to dip into your personal savings. This keeps your finances safe and gives you the chance to spread your investments across other projects or opportunities.

Documents You Need To Apply for 100% Development Finance

If those benefits appeal to you, the next step is applying for 100% development finance. But what do you need to get started? Here’s a simple checklist to help you prepare:

• Business Plan: A clear outline of what your project is about and how it’s going to make money.
• Feasibility Study: Proof that your project is a good idea, both financially and in terms of demand.
• Planning Permissions: Official approval showing your project follows the rules and is ready to go.
• Architectural Plans: Detailed drawings of what you’re planning to build.
• Cost Breakdown: A list of everything your project will cost, from materials to labour.
• Exit Strategy: Your plan for paying back the loan once the project is complete.
• Financial Statements: Information about your current financial health.
• Credit History: Reports showing your creditworthiness.
• Contractor Quotes: Estimates from the builders or contractors you’ll work with.
• Asset and Liability Statements: A summary of what you own and what you owe.

Every lender is a bit different, so it’s a good idea to check with them to see if they need anything extra. Being prepared will make the process much smoother.

Is 100% Development Finance an Option for Beginners?

If you’re new to property development, getting 100% development finance can be tough. Lenders usually see beginners as more of a risk, especially if you’ve never worked on a similar project before.

But is it possible? Maybe—but it depends on a few things. A broker who specialises in these deals can help you find lenders that might consider funding someone new. 

But, your chances will depend on things like how strong your business plan is, how much profit your project could make, and your current financial situation.

If you’re just starting out, it’s worth looking into, but keep in mind that not all lenders will be open to beginners, and your options might be limited. 

It’s a good idea to come prepared and understand it might take some time to find the right opportunity.

Can a Deposit Get You Better Rates?

Yes, adding some of your own money as a deposit can help you secure better interest rates.

Lenders look at risk when deciding on rates. By putting down a deposit, you show that you’re serious about the project and willing to share the risk. This can make lenders more comfortable and lead to lower rates.

So, how much should you put down? A deposit of around 10% to 30% of the total project costs is generally seen as a good starting point. 

For example, if your project costs £500,000, a deposit between £50,000 and £150,000 could improve your chances of getting a better deal. Of course, the more you can contribute, the stronger your position may be.

Remember, the exact amount depends on the lender and the details of your project, but putting some of your own money in is always a smart move.

Who Offers 100% Development Finance?

Don’t expect to walk into your local high street bank and walk out with a 100% development finance deal. 

Instead, you’ll need a specialised lender or even a private investor. These lenders don’t advertise their services on billboards, and their rates and terms can vary a lot.

This is where a good broker can be a real game-changer. They’ll use their network and expertise to help you find the right lender and get the funding you need.

What Affects the Cost of 100% Development Finance?

The cost of 100% development finance depends on several factors. How much you can borrow and the interest rates you’ll pay are based on your project’s potential and how the lender evaluates it.

Interest rates can vary depending on the lender, how risky they think your project is, and the current market conditions. These rates aren’t fixed, so they can go up or down.

To get the best deal, it’s a good idea to compare your options. A broker who specialises in development finance can help you find lenders you might not come across on your own.

How To Reduce Financial Risks with 100% Development Finance

Taking on 100% development finance can be risky, so careful planning is key to staying on track.

Here are some tips to help manage those risks:

• Plan Thoroughly. Start with a detailed feasibility study and risk analysis. Work out what could go wrong, check the market demand, and make sure your project makes sense financially. This prep work can save you from surprises later.
• Spread Your Funding Sources. Relying on just one lender can be risky. Look into other funding options, like partnerships or alternative financing. Having more than one source of capital can make your project more secure and less vulnerable to setbacks.
• Watch Your Cash Flow. Keeping your cash flow steady is crucial. Monitor it closely, plan for any bumps in the road, and act quickly if there’s an issue. For example, you might renegotiate terms with contractors or find extra funding to keep things moving smoothly.

With smart planning and a proactive approach, you can manage the risks and keep your project on track.

The Bottom Line

Details are key when it comes to your application. 

Lenders need to feel confident that your project is low-risk, whether it’s about construction, sales, or making a profit. The best way to do this is by providing clear, high-quality information.

While you can’t change things like your level of experience or where your project is located, you can still present a strong case. 

Show the lender why your project is worth investing in by making your vision and plans as easy to understand as possible.

Your chances of approval improve when you share solid data and organise everything well. Take the time to get these parts right—it can make all the difference.

If this feels overwhelming, a development finance broker can help. They’ll guide you through the process, connect you with lenders who are a good fit, and negotiate better loan terms for you. 

They can also handle the paperwork, saving you time and effort so you can focus on making your project a success.

Ready to take the next step? Reach out to us, and we’ll connect you with a development finance advisor who can help you make smart financial decisions for your project.