Featured Case Study
Development Finance Case: First Time Developer, No Deposit
| 100%project financed | £0deposit required | £750knet loan secured |
In brief
A first-time property developer had no deposit and prior rejections from other brokers and lenders. Howe Commercial Finance structured a creative 100% development finance solution: we renegotiated the land down to £500,000, agreed deferred consideration with the vendor (£250k upfront, £250k on completion), and secured a £750,000 net loan with all fees and interest rolled up, so the client could build three residential units with no upfront capital and no repayments during the build.
Background: the client’s challenge
We met a newly formed development business at an in-person networking event. The client was a first-time property developer with no capital for a deposit and previous rejections from other lenders and brokers, but was keen to explore every option.
Project overview
- Land purchase: £600,000 for two plots
- Estimated build cost: £500,000
- Total finance required: £1,100,000
- Projected completion value: £2,000,000
- Exit strategy: sell one property and rent another
The solution
Step 1, renegotiating the purchase price. We negotiated with the vendor to reduce the land cost to £500,000, lowering the total finance required and improving profitability.
Step 2, structuring deferred consideration. With no investors and no assets to leverage, we agreed a deferred structure: £250,000 paid upfront (funded by the lender) and £250,000 on completion, via sale or refinance, so the client secured the land without a large deposit.
Step 3, securing 100% development finance. The lender approved a net loan of £750,000: £250,000 released to purchase the land, with the balance released in staged payments to cover build costs as the project progressed.
Step 4, managing loan servicing. We negotiated terms so all fees, interest and setup costs were rolled into the loan and settled on completion, meaning no ongoing repayments during the build.
Exit strategy
The client will sell one of the new houses and rent out another, providing the funds to settle the remaining £250,000 owed to the vendor and a profit to reinvest in future projects.
The outcome
We secured a successful outcome through a creative development finance structure. The legal process is in motion and the client is on track to complete within the planned 12-month timeline, proof that even first-time developers can secure comprehensive finance with the right approach.
Key takeaways for first-time developers
- Creative financing can overcome the initial capital hurdle new developers face.
- Vendor cooperation and deferred consideration can secure land without a large deposit.
- 100% development finance is achievable when the project is well-structured with a sound exit.
- Rolling fees and interest into the loan eases cashflow during the build.
 | About the author Paul Howe · Director, Howe Commercial Finance Paul is the Director of Howe Commercial Finance, an FCA-regulated commercial finance brokerage based in Uttoxeter, Staffordshire. He has spent decades helping business owners and property investors secure the right finance, often when the high street has already said no. Every case study on this site is based on a real deal Paul has arranged. Names and identifying details have been changed or removed to protect client confidentiality. |