Development finance calculator
Estimate the facility on a loan to cost and loan to GDV basis, the equity you need and the profit on cost for a holiday let conversion, a serviced accommodation scheme or a refurbishment.
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Illustrative only. Not a quote or advice. Not an offer of finance.
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How the development finance calculator works
We add land and build or conversion cost to get the total cost, then test two caps. The loan by loan to cost is the total cost multiplied by the loan to cost percentage. The loan by loan to gross development value is the gross development value multiplied by the loan to GDV percentage. The facility is the lower of the two, because a lender will not breach either limit. The equity you need is the total cost minus the facility.
Rolled up interest is approximated as the facility multiplied by the annual rate, multiplied by the term in years, multiplied by 0.6 to reflect an average drawdown rather than the full facility for the whole term. Profit is the gross development value minus the total cost and the rolled up interest. Profit on cost is that profit divided by the total cost plus rolled up interest, shown as a percentage.
LTC versus LTGDV on holiday let schemes
Loan to cost controls your equity contribution and loan to gross development value controls the lender's exposure against the finished asset. On a holiday let conversion or serviced accommodation scheme the end value comes from selling the finished property or refinancing it at the value the projected short-let income supports, so lenders look hard at your assumptions on the nightly rate, occupancy and local demand. On a sharply costed scheme with strong end value, loan to cost usually bites first. Where the site is expensive relative to the finished value, loan to GDV can become the binding cap. We model both and the drawdown profile when we quote, and you can size the eventual term loan with our holiday let mortgage calculator once the property is letting.
Worked example
With 400,000 pounds of land or purchase, 250,000 pounds of conversion cost and a 900,000 pound gross development value on a holiday let scheme, the total cost is 650,000 pounds. At 70 percent loan to cost the loan is 455,000 pounds, and at 62 percent loan to GDV the loan is 558,000 pounds, so the facility is 455,000 pounds and the equity is 195,000 pounds. Rolled up interest at 9 percent over 18 months is roughly 37,000 pounds, leaving a profit near 213,000 pounds and a profit on cost around 31 percent.
Development finance calculator: common questions
How is a development finance facility sized?
Lenders apply two caps. Loan to cost limits the facility to a share of land plus build, often around 70 percent. Loan to gross development value limits it to a share of the finished value, often around 60 to 65 percent. The facility is the lower of the two, with development rates indicatively from around 8 percent. Enter your costs and value above to see which cap bites.
What is the difference between LTC and LTGDV?
Loan to cost is measured against the total cost of land and build or conversion, so it controls how much equity you put in. Loan to gross development value is measured against the end value, so it controls the lender's exposure if the scheme has to be sold. On a holiday let conversion or serviced accommodation scheme the end value comes from selling the finished property or refinancing it at the value the short-let income supports, and the lower of the two caps sets the facility.
Why is the interest only an approximation?
On a development the loan is drawn down in stages as the build or conversion progresses, so you do not pay interest on the full facility for the whole term. We approximate rolled up interest using around 60 percent of the full facility cost to reflect an average drawdown. The real figure depends on the drawdown profile, which we model properly when we quote.
Planning a holiday let development?
Send us the appraisal and we will come back with a view on the facility and likely terms within one working day.