Construction Finance: From Site Acquisition to Practical Completion
Mark Grant
Relationship Manager · Sep 22, 2026 · 8 min read
Construction projects require a sequence of specialist finance products that changes at each stage of the development lifecycle. From the initial site acquisition, through planning and construction, to practical completion and disposal or refinancing, each stage has its own optimal lender type, security structure, and cost profile. Understanding this sequence in advance is one of the most important pieces of financial planning any UK property developer or construction business can do.
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Site acquisition: bridging and land finance
Most site acquisitions are funded initially through bridging finance, which can be arranged quickly and does not require the site to have planning permission. Land with planning permission is financed at higher LTV than land without it. Rates for acquisition bridging typically run at 0.7-1.2% per month depending on the LTV, planning status, and exit clarity.
Land finance (term lending against land rather than short-term bridging) is available from specialist lenders for sites where a longer hold is planned before development begins. These facilities typically allow more time at lower monthly cost but require a clear development intention and strong sponsor credentials.
Development finance for the construction phase
Once planning is secured and construction is ready to commence, development finance replaces the acquisition bridging. Development finance is structured as a loan that draws down in tranches as construction milestones are achieved, verified by a monitoring surveyor appointed by the lender. The total facility is sized against the GDV (gross development value) of the completed scheme, typically at 60-65% LTGDV.
Development finance costs include an arrangement fee (typically 1-2% of the facility), monthly interest on drawn amounts (rolled into the loan rather than paid monthly in most cases), and monitoring surveyor fees. Total finance costs for a development project commonly run at 8-12% of the GDV on an all-in basis, which must be modelled carefully in the development appraisal.
"Successful UK property development is as much about sequencing and planning the finance as it is about the development itself."
- Mark Grant, Relationship Manager
Completion and exit: commercial mortgage or sale
At practical completion, the development finance must be repaid. The exit options are: sale of the completed units, refinancing to a term commercial mortgage for long-term hold, or a combination. Commercial mortgage rates for completed investment property are significantly lower than development finance rates, typically 4-7% over a 5-25 year term for strong assets.
The transition from development finance to commercial mortgage (or the sale process) must be planned carefully and included in the development appraisal. Development finance lenders set a backstop date by which the loan must be repaid; failure to exit by this date typically triggers a higher default rate and penalty interest. Planning the exit route before construction begins is essential.
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Frequently Asked Questions
What is GDV and how is it used in development finance?
GDV (gross development value) is the total expected value of the completed development. Development finance lenders use LTGDV (loan-to-GDV) as their primary sizing metric, typically advancing 60-65% of GDV.
What is a monitoring surveyor and why do I need one?
A monitoring surveyor is appointed by the lender to verify that construction progress meets the drawdown schedule and that costs are in line with the appraisal. Their fees are typically borne by the borrower and are a condition of development finance.
Can I refinance development finance before the project is complete?
Usually not at lower rates. Development finance lenders have first charge and a contractual term. Refinancing mid-construction would require their consent and is typically only considered in exceptional circumstances.
The bottom line
The finance lifecycle of a UK construction project requires expertise at every stage. Using the wrong product at the wrong stage adds cost and risk; using the right products in the right sequence minimises both. Spark Finance has specialist knowledge of development finance across all stages and works with dedicated construction and development lenders on the panel.
Check your eligibilityAbout the author
Mark Grant
Relationship Manager
Mark is a Relationship Manager at Spark Finance specialising in unsecured and secured business loans for UK limited companies and sole traders. He has extensive experience working with businesses across retail, hospitality, and construction to arrange competitive funding regardless of credit history.
