The most common question developers ask is simple: how much can I borrow? The answer depends on three numbers — the gross development value (GDV), the total project cost, and your track record. Understanding how lenders calculate these figures is the difference between a scheme that stacks and one that doesn't. Here's a practical guide with worked examples at three different scheme sizes.
LTGDV is the total loan amount as a percentage of the completed development's value. Most specialist development lenders cap at 75% LTGDV for experienced developers. First-time developers are typically capped at 65-70%. The LTGDV calculation includes all loans — the land loan and the build facility combined.
If your scheme has a GDV of £2 million and the lender's maximum LTGDV is 75%, the total facility cannot exceed £1.5 million. That's the ceiling — but the floor (how much you actually need) depends on your total project cost and your cash contribution.
LTC is the total loan as a percentage of total project cost (land + build + professional fees + finance costs). Most lenders will go to 80-85% LTC. This is a secondary check — even if your LTGDV is within limits, the lender wants to see that you're contributing meaningful equity to the project.
This is the one that catches developers out. Lenders require a minimum profit margin — typically 20% on GDV. This means the GDV must exceed total costs (land + build + finance + fees) by at least 20%. If your scheme has a GDV of £2 million and total costs of £1.7 million, the profit on GDV is 15% — below the 20% threshold, and most lenders will decline or require a larger developer contribution.
The formula: Profit on GDV = (GDV - Total Costs) / GDV × 100. If this figure is below 20%, the scheme is unlikely to be financeable at standard terms. We enforce a strict 20% minimum on all development deals — the same standard the best specialist lenders apply.
A first-time developer converting a property into two flats. Full planning consent secured. This example shows how the numbers work at the smaller end of the market.
| Item | Amount |
|---|---|
| Purchase price | £200,000 |
| Build/conversion cost | £200,000 |
| Professional fees and finance costs | £50,000 |
| Total project cost | £450,000 |
| Projected GDV | £650,000 |
| Profit on GDV | 31% ✅ |
| Item | Amount |
|---|---|
| Max loan (70% of £650k GDV) | £455,000 |
| Developer cash contribution | £0 (land equity may cover it) |
| Loan split: Land | £160,000 (80% of £200k) |
| Loan split: Build | £295,000 (staged drawdowns) |
At 70% LTGDV, the developer can borrow up to £455,000 — covering most of the project cost. With a total cost of £450,000, this means the developer needs minimal cash if they have land equity. However, most lenders will still require a 10-15% cash contribution from a first-time developer, so expect to put in £45,000-£65,000.
An experienced developer building four new-build houses. Full planning consent, strong comparable evidence, established track record. This example shows how the 75% LTGDV cap works at a mid-range scale.
| Item | Amount |
|---|---|
| Land purchase price | £600,000 |
| Build cost (4 houses) | £800,000 |
| Professional fees and finance costs | £200,000 |
| Total project cost | £1,600,000 |
| Projected GDV | £2,200,000 |
| Profit on GDV | 27% ✅ |
| Item | Amount |
|---|---|
| Max loan (75% of £2.2m GDV) | £1,650,000 |
| Developer cash contribution | £0 (but lender may want 25% of cost = £400k) |
| Loan split: Land | £480,000 (80% of £600k) |
| Loan split: Build | £1,170,000 (staged drawdowns) |
At 75% LTGDV, the maximum facility is £1.65 million against a total project cost of £1.6 million. On paper, the developer needs no cash contribution — but in practice, most lenders will want to see the developer put in at least 25% of total cost (£400,000), particularly if the LTGDV is near the 75% ceiling. The lender's concern is that a developer with zero skin in the game has less incentive to complete the scheme if costs overrun.
A larger scheme — 12 residential units in a city centre location. Full planning consent, experienced developer with a track record of similar schemes. This example shows how mezzanine finance can bridge the gap when senior debt alone isn't enough.
| Item | Amount |
|---|---|
| Land purchase price | £1,800,000 |
| Build cost (12 units) | £2,500,000 |
| Professional fees and finance costs | £500,000 |
| Total project cost | £4,800,000 |
| Projected GDV | £6,500,000 |
| Profit on GDV | 26% ✅ |
| Item | Amount |
|---|---|
| Max senior loan (75% of £6.5m GDV) | £4,875,000 |
| Developer cash contribution | £0 (but see below) |
| Item | Amount |
|---|---|
| Senior debt (65% LTGDV) | £4,225,000 |
| Mezzanine (10% LTGDV) | £650,000 |
| Total facility | £4,875,000 (75% LTGDV) |
| Developer cash contribution | £0 (if mezzanine covers the gap) |
On a £5 million scheme, the 75% LTGDV cap gives a maximum facility of £4.875 million — close to the total project cost of £4.8 million. In practice, most senior lenders will only go to 65-70% LTGDV at this scale, which means the maximum senior facility is £4.2-4.55 million. The gap between the senior facility and the total cost is where mezzanine finance comes in — a second-charge layer that can take the total facility up to 75-80% LTGDV, reducing the developer's cash requirement.
Mezzanine finance typically costs 1.5-2.5% per month — significantly more than senior debt. It only makes sense when the development profit is large enough to absorb the higher cost. On this scheme, with a 26% profit on GDV, there's room for mezzanine. On a scheme with 20% profit, mezzanine would erode the margin to a point where it may not be viable.
| GDV | Max loan (75% LTGDV) | Max loan (70% LTGDV) | Typical developer contribution |
|---|---|---|---|
| £500k | £375,000 | £350,000 | £50k-£100k |
| £1m | £750,000 | £700,000 | £150k-£250k |
| £2m | £1,500,000 | £1,400,000 | £300k-£500k |
| £5m | £3,750,000 | £3,500,000 | £800k-£1.5m |
| £10m | £7,500,000 | £7,000,000 | £1.5m-£3m |
Use our development viability calculator on the homepage for an instant estimate, or speak to us for a detailed assessment. We'll review your scheme, stress-test the LTGDV and profit margins, and tell you exactly what's achievable — before you spend time on lender applications.
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