Development finance comes in several forms. Primarily “senior” debt (a first charge over the asset) or “junior” debt, also known as mezzanine finance (a second charge over the asset).
Most lenders will aim to provide clients with a percentage of the day 1 value of the asset and subsequently seek to fund a portion of the development costs. The development costs are generally drawn down over several stages with monitoring surveyors to check that the works are being carried out to a good standard. Development finance can be used for the following:
– An internal refurbishment of a property
– A ground up construction of either a single, or multiple units.