From 0.65% pm

Development Finance in Islington

Name: Islington Development Finance
Telephone: 020 3870 3270

Secure competitive development finance for your Islington property project. Whether you're building new homes in Holloway, converting Georgian townhouses in Angel, or developing mixed-use schemes in Clerkenwell, we connect you with the right lender at the best available terms.

£400M+

Funded

100+

Lender Panel

24-hour

Decisions

0.65% pm

Rates From

What is Development Finance?

Development finance is a specialist type of property finance designed to fund the construction, conversion, or substantial refurbishment of residential and commercial properties. Unlike a standard mortgage, development finance is released in stages as your build progresses, with a Quantity Surveyor (QS) certifying completed work before each drawdown.

For Islington property developers, development finance provides the capital needed to acquire sites and fund construction costs across the borough — from premium Georgian conversion projects in Barnsbury and Canonbury to larger-scale new build developments along the Holloway Road regeneration corridor.

As specialist development finance brokers with deep knowledge of the Islington property market, we search over 100 lenders — including high street banks, challenger banks, specialist development lenders, and private credit funds — to find the most competitive terms for your specific project.

Development Finance Key Parameters

Up to 70%

Loan to Cost (LTC)

Up to 65%

Loan to GDV

0.65% pm

Rates From

£250K — £10M+

Facility Size

6 — 36 months

Term

Within 24 hours

Decisions

Types of Development Finance

The development finance market offers several products that can be combined to create an optimal capital structure for your Islington project.

Senior Debt

The primary layer of development finance, typically providing up to 65% of total development costs. Senior debt takes first charge over the property and offers the lowest interest rates, starting from 0.65% per month. This is the foundation of most development finance structures.

Stretched Senior

An enhanced senior debt facility that provides up to 75-80% of total costs from a single lender. Stretched senior eliminates the need for a separate mezzanine facility, simplifying the capital structure. Rates are typically higher than standard senior debt but lower than a blended senior plus mezzanine rate.

Mezzanine Finance

Second-charge lending that sits behind the senior debt, taking total leverage up to 85-90% of costs. Mezzanine finance reduces the equity required from the developer but carries higher interest rates (typically 1-2% per month). An intercreditor agreement between senior and mezzanine lenders is required.

Development Equity

Equity investment that can fund up to 100% of project costs in conjunction with debt. Equity providers take a share of the development profit (typically 20-50%) rather than charging interest. Ideal for developers who want to preserve capital for multiple projects or lack sufficient equity for a specific scheme.

The Capital Stack Explained

Understanding how different layers of finance combine to fund your Islington development.

Developer Equity

10-35% of total costs

Mezzanine Finance

15-25% of total costs • 1-2% pm

Senior Debt

55-70% of total costs • From 0.65% pm

The exact split depends on your project, experience, and risk profile. We structure the optimal capital stack for each scheme.

How Development Finance Works

Application & Appraisal

You submit your project details including site information, planning status, development appraisal, and build costs. We review your scheme and identify the most suitable lenders from our panel.

Indicative Terms

Within 24 hours, we present indicative terms from one or more lenders. This includes the facility amount, interest rate, fees, and key conditions. You review and select your preferred option.

Valuation & Due Diligence

The lender instructs an independent RICS valuer to assess the site value and Gross Development Value (GDV). Legal due diligence runs concurrently. A Quantity Surveyor reviews your build costs and programme.

Credit Approval & Legal

The lender issues a formal facility letter. Solicitors prepare the legal documentation including charges, debentures, and any intercreditor agreements if mezzanine is involved.

Completion & Initial Drawdown

The facility completes and the initial drawdown (typically the site purchase element) is released. You can begin or continue your development works.

Staged Drawdowns

As construction progresses, the lender's QS visits the site at agreed intervals to certify completed work. Upon certification, the next tranche of funding is released. This continues through the build programme.

Completion & Exit

Once the development is complete, you exit the facility through sale of the completed units, refinance to a term loan or buy-to-let mortgages, or a combination of both.

Projects We Fund in Islington

New build residential developments (houses and flats)

Georgian and Victorian townhouse conversions

Office-to-residential conversions (Prior Approval / PD)

Commercial to residential change of use

Mixed-use developments (retail/residential, office/residential)

Heavy refurbishment and structural renovation

Basement and lower-ground development

HMO conversions and developments

Build-to-rent schemes

Section 106 affordable housing schemes

Eligibility Requirements

While each lender has specific criteria, these are the general requirements for development finance in Islington.

Experienced Developers

3+ completed development projects
Full planning permission or prior approval in place
Professional cost plan and build programme
25-30% equity contribution
Clear exit strategy (sale or refinance)

First-Time Developers

Full planning permission in place (essential)
QS-verified cost plan and programme
Experienced main contractor appointed
30-40% equity contribution
Professional team in place (architect, PM)

Development Finance vs Bridging vs Mezzanine

Feature	Development Finance	Bridging Finance	Mezzanine Finance
Purpose	Fund construction/conversion	Short-term purchase/bridge	Top-up leverage
Max LTC	Up to 70%	Up to 75% LTV	Up to 90% (combined)
Rates	From 0.65% pm	From 0.55% pm	From 1.0% pm
Term	6-36 months	1-24 months	6-36 months
Drawdown	Staged (QS certified)	Day 1 (full amount)	Staged or day 1
Security	First charge	First charge	Second charge
Typical Use	Ground-up build, major refurb	Auction, chain break, refurb	Reduce equity requirement
Speed	2-4 weeks	5-10 working days	2-4 weeks

Example Islington Development Finance Scenarios

Illustrative examples of the type of development finance facilities we structure across Islington. These are illustrative scenarios, not completed transactions.

New Build Residential

Illustrative example

Holloway, N7

£3.2M

12-unit residential new build on a former commercial site near Holloway Road. Stretched senior facility from a specialist development lender, avoiding the need for mezzanine.

68%

LTC

0.72% pm

Rate

18 months

Term

Georgian Conversion

Illustrative example

Canonbury, N1

£1.5M

Conversion of a period property into 4 luxury apartments with basement extension. Heritage-sensitive scheme funded by a lender experienced with listed buildings.

65%

LTC

0.78% pm

Rate

14 months

Term

Office-to-Resi PD

Illustrative example

Clerkenwell, EC1

£2.8M

Prior Approval conversion of an office building into 10 apartments. Fast completion through a lender with a streamlined PD conversion process.

70%

LTC

0.68% pm

Rate

12 months

Term

Calculate Your Development Finance

Use our interactive development finance calculator to model your Islington project and see indicative funding amounts, interest costs, and projected returns.

Development Finance FAQs

Most development finance lenders have a minimum facility size of £250,000, though some will consider smaller schemes. The project should typically involve at least 2 residential units or a significant conversion/refurbishment to qualify as a development scheme rather than a bridging or refurbishment project.

Most lenders require full planning permission or prior approval to be in place before offering terms. Some lenders will consider schemes with outline planning or a resolution to grant, but this is less common and typically results in higher rates. We recommend securing planning before applying, particularly in Islington where conservation area constraints can add complexity.

Interest on development finance is typically charged on a daily basis on the drawn balance only — you don't pay interest on undrawn funds. Most facilities roll up (capitalise) interest so it's paid at the end of the term rather than monthly. This means no monthly cash outflow during the build period. The interest reserve is built into the total facility.

The lender takes a first legal charge over the development property. They may also require a personal guarantee from the directors and a debenture over the development company. If mezzanine finance is involved, the mezzanine lender takes a second charge with an intercreditor agreement governing the relationship between the two lenders.

Yes. If you already own a site and want to develop it, you can apply for development finance. The lender will typically provide a day-one facility based on the site value plus staged drawdowns for build costs. Any existing mortgage on the property would need to be repaid from the development facility at completion.

Contingency planning is essential. Most lenders require a 5-10% contingency built into the build cost budget. If costs exceed the facility amount, you may need to inject additional equity, apply for a facility increase (subject to revaluation), or secure additional mezzanine finance. We help you plan for contingencies from the outset.

Islington has extensive conservation areas and Article 4 directions that restrict permitted development rights. Lenders are aware of these constraints and may require additional comfort around heritage and conservation conditions. Schemes in conservation areas may take longer to reach planning certainty, which should be factored into your programme and finance term. We work with lenders experienced in Islington's planning context.

GDV (Gross Development Value) is the estimated market value of the completed development — what you expect to sell or refinance the finished scheme for. GDC (Gross Development Cost) is the total cost of the project including land acquisition, build costs, professional fees, finance costs, and contingency. Lenders assess both metrics: typically lending up to 65% GDV and 70% of total costs (LTC).

True 100% development finance from a single lender is extremely rare. However, by combining senior debt (up to 70% LTC) with mezzanine finance (additional 15-20%) and/or equity partners, it is possible to fund up to 100% of project costs. The cost of capital increases with higher leverage, so this needs careful appraisal to ensure the scheme remains profitable.

Most development finance facilities are offered at variable rates linked to the lender's base rate or SONIA. Fixed rates provide certainty of costs and are available from some lenders at a premium. For shorter-term projects (under 12 months), variable rates are typically more cost-effective. For longer builds, the security of a fixed rate may be worth the premium, particularly in a rising rate environment.

Development Finance by Area

Angel Highbury Holloway Finsbury Park Clerkenwell Canonbury Barnsbury Tufnell Park Upper Street

Ready to Fund Your Islington Development?

Get a free, no-obligation quote from our development finance experts. We'll find the best terms from over 100 lenders.

020 3870 3270