Construction Loans
We arrange fast, flexible construction loans for residential and commercial building projects across the whole of the UK, Ireland and parts of Western Europe. With a panel of 300+ specialist lenders, every deal is packaged precisely for your project – from £100k to £100m+.
Construction loans UK: typical terms
Whatever your scenario, lenders on our 300+ panel can typically offer:
- Funding throughout the UK, Eire and Western Europe
- Loan size: £100k to no upper limit
- Maximum LTC (loan to cost): up to 90%
- Maximum LTGDV (loan to gross development value): up to 75%
- Rates from: BBR + 4.99% p.a.
- Terms up to 48 months
- Interest rolled up, no monthly payments
- Land purchase and build costs funded within one facility
Every scheme is individually considered, factoring in your track record, the build costs, the estimated Gross Development Value and your exit plan, to give you a funding proposal that is affordable, competitive and attainable.
What is a construction loan?
A construction loan is a short-term funding facility used to finance the building, conversion or heavy refurbishment of property. Unlike a conventional mortgage, which is released in one lump sum against a completed property, a construction loan is drawn down in stages as the build progresses, with each tranche released against certified works on site.
In the UK, construction loans sit within the wider development finance market. Depending on your scheme, the right facility might be ground-up development finance, a refurbishment bridging loan, a self-build facility or a stretched senior loan topped up with mezzanine finance. As a specialist broker, we identify the structure that fits your scheme, not the other way round.
How do construction loans work?
Construction loans follow a simple staged structure, designed to protect both the borrower and the lender while keeping your cash flow smooth throughout the build:
- Initial advance: A first drawdown is released on day one, typically to fund the purchase of the land or site (often up to 65–70% of the site value, or more with additional security).
- Staged drawdowns: The build costs are then released in arrears in agreed tranches, usually monthly, following a site visit from the lender’s monitoring surveyor who certifies works completed.
- Interest rolled up: Interest is normally retained or rolled into the loan, so there are no monthly payments to service during the build. You repay everything at the end.
- Exit: The loan is repaid on completion via the sale of the finished units, or by refinancing onto a longer-term investment mortgage or a development exit bridging loan.
Because funds are released against certified progress, lenders will assess your build programme, cost schedule and contractor as closely as the bricks and mortar itself. This is exactly where an experienced broker adds value, presenting your scheme to underwriters in the strongest possible light and heading off problems before they delay a drawdown.
Construction loan types
Residential construction loans
Ground-up construction finance for single or multi-units and larger developments. Lenders assess experience of developer, area demand, land & build costs, GDV and exit. Max. LTC up to 90% and LTGDV up to 75% typically available.
Commercial construction loans
Funding for offices, hotels, industrial and factory units and mixed-use schemes. Many commercial construction lenders require some form of secured exit before works commence.
Conversion and heavy refurbishment loans
Converting offices to residential under permitted development, splitting a house into flats, or developing an uninhabitable property? Lenders on our panel offer refurbishment bridging loans of up to 75% end value.
Land purchase and pre-planning
Need to secure a site quickly, or fund a plot while awaiting planning? Site acquisition bridging loans and bridging pending planning can hold the position until your full construction facility is ready to complete.
Construction loan rates and costs
Construction loan rates in the UK typically start from around BBR + 4.99% p.a. for strong residential schemes, with commercial construction rates from BBR + 5% p.a. The rate you are offered will be determined by:
- Developer experience and track record
- Credit profile
- Net worth and the equity you have available
- Cost of the land and cost of the build
- Gross development value
- Type of scheme (new build, conversion, mixed-use, multi-unit)
- Feasibility and strength of the exit strategy
Beyond the headline rate, you should budget for arrangement fees, valuation and monitoring surveyor fees, legal costs and, with some lenders, an exit fee. This is precisely why comparing construction loans on rate alone is a mistake, a low headline rate with a 2% exit fee on GDV can cost far more than a slightly higher rate with no exit fee. We model the true total cost of every offer so you can compare like for like.
Construction loan calculator
Need to know how much you could borrow, or what your construction loan will cost to repay? Try our development finance calculator, a quote will be displayed in seconds. Just give us a call after and we can talk through it in more detail.
Find the best loan for your project
The “best” construction loan is not the one with the lowest advertised rate, it is the facility whose leverage, drawdown schedule, term and fee structure fit your specific build programme and exit. When searching for the best construction loans, compare:
- True total cost: Arrangement fees, monitoring fees, exit fees and rolled-up interest, not just the headline rate.
- Leverage: A higher LTC facility can matter far more to your returns than a marginally cheaper rate, because it leaves your equity free for the next project.
- Drawdown flexibility: How quickly does the lender release tranches, and how onerous is their monitoring surveyor?
- Lender appetite: Some lenders love first-time developers; others won’t touch them. Some fund modular construction; others won’t. Knowing who wants your deal this month is impossible without daily market contact.
- Speed and certainty: A slightly more expensive lender who completes on time is worth more than a cheap one who withdraws at the eleventh hour.
With a panel of 300+ construction and development lenders, we make it our mission to secure the deal that is genuinely best for your project, not just the one that looks cheapest on paper.
Construction Loan FAQs
Lenders on our panel will typically fund up to 90% of total project costs (land plus build) or up to 75% of the gross development value, whichever is lower.
To put together a construction finance proposal, we will generally need:
- Executive summary
- Borrowing vehicle and corporate structure
- Details of shareholders and directors
- Statement of assets and liabilities
- CVs and profiles of the development team
- Detailed development appraisal and accommodation schedule
- Building costs and cashflow profile
- Details of planning permission / application
- Site plan and drawings/CGIs
- Sales or valuation comparables (if available)
- Proof of exit strategy (sales, refinance DIP, lease details etc.)
Be realistic. Use conservative figures for GDV, build costs and timescales. Lenders will not rely on optimistic assumptions, and a contingency of at least 5–10% on build costs is expected.
Secure planning first where possible. Lenders will typically only approve a full construction facility once planning has been granted, though bridging can hold a site while you await the outcome.
Appoint your contractor carefully. The lender will assess your contractor’s financial standing and track record. A contractor who can deliver on time and on budget is central to a smooth drawdown process.
Have a clear exit strategy. Lenders want to know exactly how the loan will be repaid, sale of the completed units, refinance onto a term loan, or a development exit facility.
Appoint a specialist broker. The construction finance market is diverse, and it takes a specialist broker to know how best to increase your likelihood of approval, and to alleviate a great deal of stress along the way.
A mortgage is released in one lump sum against a completed property and repaid monthly over many years. A construction loan is short-term (usually 6–48 months), released in stages as the build progresses, with interest normally rolled up so there are no monthly payments. The loan is repaid in full at the end, via sale or refinance.
In the UK the terms are largely interchangeable. “Construction loan” is often used for the build-cost element of a facility, while “development finance” describes the whole package including land purchase. Whatever the label, the structure is the same: an initial advance followed by staged drawdowns against certified works.
Yes. While experienced developers access the highest leverage and lowest rates, several lenders on our panel actively support first-time developers, particularly where you appoint an experienced contractor and project manager, and the scheme fundamentals are strong.
Usually, yes. Most facilities fund an initial advance against the site purchase (typically up to 65–70% of land value) plus up to 100% of the build costs in stages, subject to overall LTC and LTGDV limits.
Terms can often be issued within 24–48 hours, with completion typically taking 3–6 weeks depending on valuation, monitoring surveyor reports and legals. Where you need to move faster, for example on an auction purchase, auction bridging finance can secure the site first.
No. Interest is rolled up or retained, meaning nothing is payable until the loan is redeemed at the end of the term. This keeps your cash free for the build itself.
Most lenders expect the developer to contribute around 10–25% of total project costs.
Speak to your broker early. Options include a term extension with the existing lender or refinancing onto an exit bridging loan, which repays the construction facility and funds the final works, often at a lower rate once the heavy construction risk has passed.
Construction loans for business and investment purposes are unregulated and not covered by the Financial Conduct Authority. If the loan would be secured against a property you or an immediate family member will live in, it may be a regulated contract, we will point you in the right direction if your project falls outside our remit.
Yes. Lenders on our panel fund offices, hotels, industrial units, student accommodation and mixed-use schemes, typically up to 85% LTC and 65% LTGDV. Many commercial lenders will want a secured exit, such as a pre-let or operator agreement – before works commence.
Why use us for your construction loan?
Tiger Financial has been involved in the property finance market since 2004. As a specialist finance broker solely focused on the bridging and development finance sector, we assist our clients every step of the way, from initial fact find, to financial modelling, deal structuring, file submission and active management through the legal and underwriting process. We use our long experience to influence the underwriters, look ahead for problems and offer solutions where we can, ensuring you the very best chance of a successful financing outcome.
We negotiate for you, achieve the lowest fee levels possible, and showcase your scheme to lenders in the most positive light. We firmly believe that your success is our success, so get in touch now to see how we can help ignite your property business.