Development finance drawdowns release funding in stages as a project progresses. That sounds straightforward until a builder needs paying before the next inspection or an unexpected groundworks bill arrives. For a Hampshire developer, understanding the cash movement can be just as important as agreeing the headline facility. A lender may approve a total budget without making all of that money available at the start. Before committing to a scheme, map out who pays each cost, when the lender releases funds and how you will cover the gaps between those dates.

Separate the initial advance from the build facility A development facility may include an initial advance towards the land or property purchase and further advances for eligible works. The details depend on the lender and project. Your own equity contribution, professional fees and contingency also need to be identified. Do not read a total facility figure as cash available on completion. Ask for a schedule showing the initial net advance, the remaining works facility and any allowances for interest or fees. This makes it easier to compare two offers whose headline amounts look similar but whose practical funding differs.

How staged releases can work The lender agrees a process for checking progress and authorising subsequent advances. Shawbrook's development finance guidance describes staged drawdowns against evidenced work, with monitoring involved. Other lenders may structure the process differently, so the actual facility agreement matters. Clarify whether payments are in arrears, the notice required and the documents needed for each request. A monthly site meeting is not necessarily a same-day payment instruction. Build the expected administration and transfer time into your contractor payment schedule so the project is not relying on an unrealistic release date.

What does the monitoring surveyor do? A lender-appointed monitoring surveyor considers progress, costs and the remaining work from the lender's perspective. Their role is different from the architect, contract administrator or building control inspector. A positive monitoring report does not replace your own professional oversight or confirm every aspect of workmanship. Ask who appoints and pays the monitor, how visits are arranged and what triggers an additional report. Keep changes to the design or specification documented. An unreported change can affect both the cost assessment and the lender's willingness to release the next tranche.

Model cash flow, not just overall profit A scheme can appear profitable on a summary appraisal yet run short of cash halfway through. List expected contractor payments, professional costs, utility connections and finance charges alongside the likely drawdowns. Identify any amount that must be paid before it can be claimed from the lender. Include a realistic contingency supported by the project's risks rather than treating it as spare profit. For coastal or constrained South Coast sites, access and site conditions deserve careful professional assessment. The finance model should follow the actual programme, not an idealised straight line.

Planning and conditions can affect availability A lender will want to understand the consent supporting the project and any conditions that must be satisfied before work or occupation. GOV.UK explains that planning permission and other approvals are distinct: building regulations and additional consents may still be required. Your solicitor and planning adviser should confirm the position for the site. Explain outstanding matters early, including access, services and any restrictions on title. An attractive projected value does not remove these issues. If the scheme changes after the offer, check the implications before instructing different works or assuming funding remains unchanged.

The exit belongs in the appraisal too Drawdowns are only one part of a facility that eventually has to be repaid. Show the intended sales or refinance route, expected timing and remaining costs after the build is complete. Test a slower sales period and a less optimistic completed value. If you plan to retain units, investigate the term finance and rental assessment in advance. Charles and Melanie can review the funding structure alongside your professional team. Bring the appraisal, programme, cost breakdown, permission documents and experience summary so the discussion starts with the actual project rather than a headline loan request.

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Frequently asked questions

Is all the development loan paid upfront?

Not usually. A development facility commonly separates the initial advance from later works funding, released under the agreed drawdown conditions.

Does a monitoring surveyor replace my project team?

No. Monitoring is for the lender and does not replace your architect, contractor management, building control or independent professional advice.

Can the facility cover a cost overrun automatically?

No. Extra funding needs approval and may not be available. Agree contingency and your own cash resources before the project starts.

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02392 000399 · charles@vantageacf.co.uk

Related reading

• Refurbishment finance: light works, heavy works and choosing a route
• Development exit finance: more time to sell is not the same as a finished plan

General information, not personal finance, legal or tax advice. Lending is subject to assessment. Regulatory protection depends on the transaction.