Development finance is a type of financing that is used to fund the construction or renovation of a property. It is typically used by property developers or builders who need to finance the costs of developing a property project.

Development finance is usually secured against the property being developed, and the loan amount is typically based on the estimated value of the completed project. The funds are released in stages as the development progresses, and the lender may also require the borrower to provide regular updates on the project’s progress.

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There are several types of development finance, including:

1. Residential development finance: Residential development finance is used to fund the construction or renovation of residential properties, such as apartment buildings or housing developments.

2. Commercial development finance: Commercial development finance is used to fund the construction or renovation of commercial properties, such as office buildings, retail spaces, or industrial facilities.

3. Mezzanine finance: Mezzanine finance is a type of development finance that is used to fund the gap between the amount of equity and the senior debt required to finance a development project. Mezzanine finance is usually provided by a specialist lender, and it is typically more expensive than other types of financing.

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Development finance can be a valuable tool for property developers or builders who need to finance the costs of developing a property project. However, it’s important for borrowers to carefully consider the terms and conditions of any development finance agreement, including the interest rate, repayment terms, and any fees or charges, to ensure that the agreement is a good fit for their financial situation and business needs.