Securing the right funding structure is a critical step in any successful property development project. For developers targeting high-value areas like Central London, senior development finance provides the cornerstone of capital stack structuring. Fraser Bond offers expert guidance to investors and developers on how to structure senior finance for maximum efficiency, compliance, and return on investment.
Senior development finance is a secured loan facility that covers the majority of the development cost—often between 60% and 80% of Loan-to-Cost (LTC) or 65–75% of Gross Development Value (GDV). It ranks first in repayment priority and is secured against the property via a legal charge.
Senior finance is most commonly used to:
Fund ground-up construction or refurbishment
Bridge capital gaps before exit via sale or refinance
Leverage existing equity to enable multiple developments
In the London market, senior debt is typically offered by specialist lenders, challenger banks, and private institutions, often coordinated through advisory firms like Fraser Bond.
A fully itemised development appraisal is essential. It must include:
Land acquisition cost
Construction and professional fees
Contingency provisions
Exit strategy (sale or refinance forecast)
Fraser Bond works with clients to validate feasibility, ensuring lender alignment and robust risk analysis.
Lenders will typically provide:
65–75% of GDV or
80–85% of total costs, depending on experience and project profile
Fraser Bond assists developers in negotiating stretch senior finance, which offers higher leverage than standard senior debt—reducing equity injection while maintaining legal compliance.
The capital stack includes:
Senior Debt – Priority loan secured against the property
Equity – Developer’s own funds or third-party equity
Mezzanine Debt (if applicable) – Secondary finance with higher interest
Fraser Bond helps optimise capital stack efficiency by sourcing cost-effective senior loans and integrating mezzanine or equity where needed.
Options include:
Rolled interest: Payable at the end from sales proceeds
Serviced interest: Monthly payments from borrower cashflow
Part-serviced: Combination of both
Fraser Bond works with clients and lenders to structure repayment terms that align with development timelines and cashflow realities.
Funds are drawn in stages based on:
Pre-agreed construction milestones
Independent surveyor reports
Verified cost-to-complete assessments
Fraser Bond coordinates with lenders, surveyors, and contractors to ensure smooth drawdowns, avoiding project delays or funding gaps.
Project: Residential redevelopment in Vauxhall, Zone 1
GDV: £12M
Total Cost: £8.4M
Senior Loan: £6.7M (80% LTC) from a specialist challenger bank
Equity Contribution: £1.7M
Term: 18 months, rolled interest
Exit: Forward sale of completed units
Fraser Bond structured and brokered the finance, enabling the client to retain maximum equity while reducing risk exposure.
Fraser Bond provides a comprehensive advisory and brokerage service for developers across London, including:
Lender matchmaking with challenger banks and private institutions
Capital stack modelling including stretch senior and mezzanine options
Regulatory and planning support for compliance assurance
Drawdown and project monitoring coordination
Exit planning via sales, lettings, or refinance
Whether you’re financing a single infill site or a multi-unit scheme, Fraser Bond ensures your senior development finance is efficient, compliant, and aligned with your business objectives.
Proper structuring of senior development finance is essential for the success of property projects in London’s competitive market. With the right loan-to-cost ratio, capital stack alignment, and lender engagement, developers can minimise financial risk while maximising project return.
Visit FraserBond.com to request a tailored development finance consultation or speak to a senior advisor about your project’s funding strategy.
