Our guides are researched and drafted with digital tools, then written and approved by Justin, Principal, from his own experience.
The typical senior development rate is around 7.5% a year: the average published rate in our lender data, October 2026.
You have a site, planning and an appraisal. The appraisal used a rate from a headline. Then the terms arrive and the interest line has moved. The scheme may still work. This guide helps you check before you ask a lender.
The 30-second version
- Senior debt: around 7.5% a year, the average published rate in our lender data (October 2026). Loans run from £200k to £100m+.
- Mezzanine and stretch senior: priced above senior, case by case, up to 85% LTGDV in total.
- Fees on top: the lender's arrangement fee, often 1% to 2%, then our fee, valuation, legal and monitoring costs.
- The catch: a rate is only half the answer. How much the lender will lend against the end value matters just as much.
Senior debt: what it costs and how far it goes
Senior debt is the main facility that funds your build. The 7.5% is an average; your scheme is priced on its own merits.
In my experience, some lenders will lend senior debt up to 70% of gross development value (LTGDV) for the right developer with the right track record. With extra security in the background, or pre-sales in place, it can reach around 75%.
What moves your rate
Lenders weigh the whole scheme, not one number. Your scheme sits above or below that average depending on these points:
- Loan to value of the finished scheme. Published rates differ a little from one LTGDV band to the next (see the live figures on our rates page), so tell us your LTGDV.
- Your track record. Lenders look at completed schemes of a similar size and type. We write the sponsor CV with you.
- Planning. Lenders look at planning status, and the planning documents go into the data room we prepare.
- Location and sector. Lenders differ in their appetite for the location and the type of scheme, so we match each deal to one with a real appetite.
- Build type. The QS report sets out the build cost and programme and goes in the lender data room.
Mezzanine: filling the gap
Mezzanine sits behind the senior loan and is priced above it, case by case. Stretch senior and mezzanine can take total borrowing up to 85% LTGDV, which means less equity from you.
Senior, stretch or mezzanine? A quick guide
| Your situation | What it usually means | Next move |
|---|---|---|
| Your equity covers the gap to 70% LTGDV | Senior alone can fund it | Ask for senior terms |
| You need more than 70% | Stretch senior or mezzanine, priced above senior, up to 85% LTGDV | Compare one stretch facility with senior plus mezzanine, on total cost |
| You have extra security or pre-sales | Senior may reach around 75% | Show the evidence early |
| Your track record is thin | We match each deal to a lender with a real appetite for that borrower and track record | Tell us before we approach anyone |
What it adds up to: a worked example
Illustrative, not a quote. £2,500,000 senior facility, 12 months, about 7.5% a year, simple interest rolled up, fully drawn from day one.
| Item | Amount |
|---|---|
| Interest at about 7.5% a year | £187,500 |
| Lender arrangement fee (1%) | £25,000 |
| Our fee (1% of the gross loan) | £25,000 |
| Total | £237,500 |
Valuation, legal and monitoring costs come on top.
Fees: what to budget for (illustrative; every case is priced individually)
- Lender arrangement fee: often 1% to 2%.
- Our fee: generally 1% of the gross loan, due on completion. An application fee is possible on complex cases, agreed in writing first. We put every fee in writing before you commit. There is no separate charge for preparing the lender pack.
- Valuation: £3,000 to £15,000+, depending on the scheme.
- Legal: £5,000 to £25,000+, depending on complexity. Development legals cover build contracts, novations, step-in rights and professional appointments.
- Monitoring surveyor: £500 to £2,000, depending on the size of the scheme. The surveyor values the work done about once a month, and the lender then releases that stage of funding.
- Lender exit fee: 0% to 1% of the loan, where charged.
Bank Rate and your rate
Bank Rate was cut four times during 2025, to 3.75% in December (Bank of England). Lenders set development finance rates on their own cost of funds and risk, so treat Bank Rate as one input. The rates in this guide are the October 2026 reading of our lender data. For the live figures by loan-to-value band, see our development finance rates page.
Before you ask for terms
- Is your appraisal built on a rate with a date and a source?
- Do you know your LTGDV, and whether it sits at or above 70%?
- Can you show planning status and any pre-sales evidence?
- Is your track record written up, with completed schemes?
- Have you compared one stretch facility against senior plus mezzanine, on total cost?
Next step
Before any lender sees your scheme, we prepare an investment memorandum and a lender data room, and we reconcile the figures. Tell us about your scheme and we will talk it through. It is a confidential, no-obligation chat.
Discuss your deal · 0330 223 7873
Read next: Development finance: how it works | Development finance rates and costs | Development finance outlook, mid 2026 | Ground-up development finance 2026 | BSR Gateway 2 and 3: a developer's guide | Forward funding explained
We arrange unregulated business and investment loans, for business or investment purposes only - never secured on a home you or your family live in. A loan on such a home is regulated lending and belongs with an FCA-authorised mortgage adviser. Funding Developers Limited is not authorised or regulated by the Financial Conduct Authority.