Development finance rates, and what they cost in practice.
From 8% a year, charged on the drawn balance and rolled up through the build. Here is the whole of market picture for September 2026 by leverage, the fees that sit on top, and why a first time developer and an experienced one pay very different rates for the same scheme.
By Dominic Whitecross, Co-Founder, HyLend. Last reviewed September 2026.
The short answer
Senior development finance in the UK currently prices from around 8% a year at up to 55% loan to gross development value, rising to around 10.5% at 70%. Interest is charged on the drawn balance and rolled up, so the real cost over a build is lower than the rate applied to the full facility. Arrangement fees of around 2%, exit fees of 1% to 1.5% and monitoring costs sit on top.
Mezzanine finance behind the senior facility prices from about 1.35% a month, taking combined leverage to around 80% of GDV.
Indicative senior rates by loan to GDV
| Loan to gross development value | Indicative annual rate from | Typical borrower |
|---|---|---|
| Up to 55% | 8.0% | Experienced developer, strong location, low leverage |
| 55% to 60% | 8.75% | Established track record, standard scheme |
| 60% to 65% | 9.5% | Most schemes with an evidenced exit |
| 65% to 70% | 10.5% | Maximum senior leverage, specialist lenders |
Indicative whole of market ranges, September 2026, consistent with our calculator. Loan to cost is capped at around 85% alongside these limits.
Two levers move you down the table. Equity, which includes land and planning spend you have already committed if the lender recognises it. And track record, which is worth a full point or more on identical numbers. How much equity development finance needs →
What the rate actually costs over a build
Development interest is charged on what you have drawn, not on the facility. Because drawdowns follow certified works, the average balance over a build is typically around 60% of the facility. On a £3m facility at 9.5% over 15 months, interest on the full amount would be about £356,000, but on a realistic drawdown profile it is closer to £214,000.
| £3m facility, 15 months, 9.5% pa | Indicative |
|---|---|
| Interest on realistic drawdown (about 60% utilisation) | about £214,000 |
| Arrangement fee (2%) | £60,000 |
| Exit fee (1.5%) | £45,000 |
| Monitoring surveyor (5 quarters) | about £6,250 |
| Effective cost of the facility | about £325,000, roughly 10.8% of the facility |
The fees add about two points to the effective annual cost. Compare facilities on this total, not on the rate. Model your scheme on the calculator →
Mezzanine and stretched senior
Where senior leverage is not enough, mezzanine sits behind it from about 1.35% a month, rising with combined leverage, plus its own arrangement and exit fees. Some lenders offer a stretched senior facility to 75% of GDV or more at a single blended rate, which is simpler than two lenders but rarely cheaper. Mezzanine finance →
The number to ask every lender for
Total cost of the facility over your programme, with interest on a realistic drawdown profile, all fees, and the exit fee basis stated. Two lenders a point apart on rate are routinely within a fraction of a percent on total cost once fees are in.
Send us the appraisal and we will price it across the market →
When the build is finished
Once practical completion is reached, development pricing is the wrong pricing. A development exit facility or a term refinance on the completed units is usually cheaper and gives you time to sell without pressure. Development exit finance →
Indicative only and not an offer of credit. Pricing depends on the lender, the asset, the leverage, the exit and the borrower, and it can change at any time. HyLend is a credit broker, not a lender.
Development finance rate FAQs
What are development finance rates in the UK right now?
Indicatively from 8% a year at up to 55% loan to gross development value, rising to around 10.5% at 70%. Mezzanine behind a senior facility prices from about 1.35% a month. Add a lender arrangement fee of around 2%, an exit fee of 1% to 1.5% in many cases, and monitoring surveyor fees through the build. Whole of market indications for September 2026.
How is interest charged on a development loan?
On the drawn balance only, and rolled up rather than paid monthly. Because the facility is drawn in stages against certified works, the average balance over the build is well below the facility size, typically around 60% of it, so the interest bill is materially lower than the headline rate applied to the full loan would suggest. The calculator models this.
What fees apply on top of the rate?
A lender arrangement fee of around 2% of the facility, an exit fee of 1% to 1.5% of the facility or of GDV depending on the lender, a monitoring surveyor at roughly £1,000 to £1,500 per visit or quarter, the valuation, and legal costs on both sides which are heavier than on any other product. Over a twelve to eighteen month build the fees can add two to three points to the effective annual cost.
Why is development finance more expensive than a commercial mortgage?
Because the lender is funding something that does not yet exist. A commercial mortgage is secured on a completed, income producing asset. A development facility is secured on a site and a plan, and the security only becomes valuable if the build finishes on budget and the units sell or let. The rate reflects construction risk, sales risk and the absence of income during the term.
What decides the rate I will be offered?
Leverage against GDV and cost first. Then your track record, which matters more here than on any other product. Then the scheme: location, unit mix, planning position and contractor. Then the exit, whether sale or refinance, and how well evidenced it is. Experienced developers with a completed scheme or two behind them price a full point or more below first time developers on identical numbers.
Can I get a cheaper rate with more equity?
Yes, and it is the most reliable lever. Dropping from 70% to 60% loan to GDV can move the rate by two points and widen the lender pool considerably. Where the equity is land you already own or planning spend already committed, getting it recognised properly by the lender achieves the same result without new cash.