How Does Property Development Finance Work? A Step-by-Step Guide

If you’re building from the ground up or taking on a major refurbishment project, chances are you’ll need development finance to fund it. This type of specialist property loan is designed for developers looking to purchase land or sites and construct residential, commercial or mixed-use buildings.

Unlike a traditional mortgage, which can last decades, development finance is a short-term solution (usually repaid within 9 to 36 months) and tailored around the construction timeline and sales strategy.

In this guide, we’ll cut through the complexity to give you a clear understanding of:

• What development finance is
• How it works
• Who qualifies
• How to access the best deals

We’ll also show you how Brickflow’s digital platform makes it faster and easier to secure funding, giving you instant access to 100+ lenders and saving hours of time compared to the traditional, manual approach.

Why Development Finance Matters 

• The UK property market sees £15 billion in development loans issued each year, highlighting the scale and importance of this funding stream.
• But it's not always smooth sailing: Only around 55% of developers secure funding with the first lender they approach. This shows how important lender matching and deal presentation can be in getting a ‘yes’. That’s exactly where Brickflow helps.

What is development finance?

Property development comes with countless moving parts, from planning permissions and construction timelines to market fluctuations and material costs. But one of the more predictable elements is how development projects are financed.

Development finance is a short-term loan designed to fund the construction, conversion, or heavy refurbishment of residential, commercial or mixed-use property schemes. These loans are typically repaid through the sale of the completed development or by refinancing onto a long-term investment mortgage.

At Brickflow, our data from Q1 2025 shows the smallest development loan offered was £25,000, and the largest was £150 million, illustrating how flexible and wide-ranging this funding can be.

Key Features of Development Finance:

• Short-term funding, typically repaid within 9–36 months
• Used for ground-up builds, conversions, or major refurbishments
• Applicable to residential, commercial, and mixed-use projects
• Funds are usually released in stages, in line with the build schedule
• Repayment is made through a sale or refinance at project completion

Understanding the Capital Stack

To fully grasp development finance, it’s important to understand the capital stack — the layers of funding that make up a project’s financial structure. These typically include:

Senior Debt: The main loan, often provided by a bank or specialist lender. This is usually the largest portion of the capital stack and secured against the property.

Equity: The developer’s own cash or investment, used to cover the deposit and sometimes initial costs.

Mezzanine Finance (optional): A second layer of funding that sits between senior debt and equity, often used to reduce the amount of equity the developer needs to contribute.

Each layer comes with different levels of risk, cost, and repayment priority, and choosing the right structure can significantly impact your project’s success.