100% Development Finance

Find out how to secure 100% development finance without the need for a deposit.

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Home Development Finance 100% Development Finance
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Updated: December 4, 2023

If you’re looking for funding for a new property project – either for a residential or commercial development – but don’t have any money up front, you’re probably wondering if you can get development finance without the need for a deposit.

While it’s definitely not easy, it can be possible to get 100% development finance in the right circumstances and with the help of a specialist in this field. In this article we’ll look at how to go about it, how your experience plays a role and what other options you may have.

Can development finance cover 100% of your construction costs?

Yes it’s possible. Whether you’re branching out on your first solo development project, or have several under your belt but lack the cash flow, there are ways to cover all of your costs without a deposit.

One way to do this is through an arrangement known as joint venture development finance. Many lenders will use the terms ‘100% development finance’ and ‘joint venture development finance’ interchangeably, referring to the same scheme.

Joint venture development finance is, as the name suggests, essentially a joint venture between the developer and the lender. The lender agrees to fund the full cost of the development, taking on all of the financial risk, in return for a share of the profits once it’s complete. Often this is a 50/50 split, but it can vary. Some lenders for example will charge rolled up interest on the loan in return for a smaller cut.

The joint venture partner will usually take an active role in overseeing and advising on the development and finances are typically managed via a special purpose vehicle (SPV). This sort of finance suits large projects and experienced investors – most lenders will be looking for projects with a gross development value (GDV) of over £1 million and healthy profits of 25%+.

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Will this be possible if you have no experience?

It will be much more difficult to get 100% development finance if you have no experience at all, as you’ll be perceived as a much higher risk to lenders. Most joint venture finance partners will require you to have successfully completed at least one development of a similar size and scope, sometimes more. With such large sums on the table, lenders need to know that you have the skills and experience to make a profit.

This isn’t to say that it’s impossible, but if you are looking for 100% lending with no experience then you will definitely need support from a specialist broker, as you’ll be looking at very niche lenders with a high appetite for risk.

How to get a 100% development finance loan

To give yourself the very best chance of your application being successful, there are a few things you’ll need to get in place before you start.

1. Get matched to a specialist mortgage broker

We can help you get matched to a specialist broker who can identify potential lenders and compare and negotiate the best rates and terms on your behalf. A good advisor, such as the ones we work with, should have existing relationships with these specialist lenders and be able to guide you through the whole process.

2. Prepare your business case

It’s absolutely key that you can present a potential lender with a robust business case demonstrating your experience, the viability of the scheme and the projected profits.

As part of this you’ll need to include your exit plan – this is key as lenders will want to see clearly how they will be getting their money back on completion of the project.

3. Get planning permission agreed

A joint venture partner will only consider projects with detailed planning consents already in place. This will need to be done before you make your application, so you will need to fund this yourself.

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Will this be possible if you have no experience?

It will be much more difficult to get 100% development finance if you have no experience at all, as you’ll be perceived as a much higher risk to lenders. Most joint venture finance partners will require you to have successfully completed at least one development of a similar size and scope, sometimes more. With such large sums on the table, lenders need to know that you have the skills and experience to make a profit.

This isn’t to say that it’s impossible, but if you are looking for 100% lending with no experience then you will definitely need support from a specialist broker, as you’ll be looking at very niche lenders with a high appetite for risk.

Will you get better rates if you put down some deposit?

Yes, probably. Borrowing any kind of money is always about risk, and the higher the risk the higher the rates you’re likely to be offered. If you can reduce the amount you need to borrow by putting in more of your own cash, then you may be able to find more competitive deals.

Which lenders offer 100% funding?

You won’t just be able to pop into your local bank for 100% loan-to-value development finance, you’ll need a very specific type of lender or even a private investor – the sort that doesn’t necessarily advertise themselves widely. Because 100% development finance packages are always put together on a bespoke basis, rates and terms will always vary and it can be difficult to compare offers.

This is where your specialist broker will really prove their worth, using their experience of the market and existing contacts to find you the finance you need.

Other options for developers with limited or no deposit

Joint venture development finance isn’t the only option if you have very little or no deposit, so if you don’t think it’s an option for you then it’s still worth talking to an advisor as there may be other ways to secure the money you need.

Private investment

If you have a good track record and the development is strong, you may be able to attract private investment. This could be for the entire project, or in combination with other finance, where the private investor just provides the deposit that you don’t have.

Equity release

If you have a portfolio of properties then you may be able to remortgage one or more of these to release enough equity for a deposit for your development project.

You may even be able to use your own home to release equity.

Offer additional security

An alternative to actually releasing equity from other properties is to simply use those assets as extra security. This can help to reduce the risk for potential lenders as they will have their loan secured against existing properties as well as the future value of your development.

Get matched with a development finance specialist

If you’re confident in your development plans and ready to take the next steps, it’s time to get yourself matched with a development finance specialist. Finding the right person for you doesn’t have to be a chore as we offer a free, no obligation matching service, based on your circumstances and unique needs.

Give us a call on 0808 189 2301 or make an online enquiry and we’ll assess your financial situation and arrange a call for you with the advisor that we think is the right match for you.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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