Development Finance Terms Explained: GDV, LTC and More

By PMS Mortgages · Published 7 November 2026 · Meet Ria Ali

Development finance comes with its own vocabulary. Lenders talk in GDV, loan-to-cost and rolled-up interest, and understanding these terms helps you read a term sheet properly and compare offers on a like-for-like basis. Here are the terms that matter most.

GDV: gross development value

GDV is what the finished scheme is expected to be worth once complete, usually based on a valuer's view of the sale prices of the finished units. Lenders use it to judge how much risk they are taking and to cap the total loan.

Loan-to-GDV

This is the total loan as a percentage of the GDV. It shows how much headroom there is between the debt and the finished value if sale prices fall. Lenders set a maximum loan-to-GDV, and it varies with the scheme and your experience.

Loan-to-cost (LTC)

Loan-to-cost compares the loan with the total cost of the project: land, build costs, professional fees, finance costs and contingency. It tells you how much of your own money you will need to put in. Two offers with the same loan-to-GDV can need very different amounts of equity once you look at loan-to-cost.

Day-one advance

The day-one advance is the money released at the start, usually towards buying the site. It is often a smaller share of the land price than first-time developers expect, so check this figure early.

Drawdowns and the monitoring surveyor

Build costs are normally released in stages, called drawdowns, as the work progresses. Before each one, the lender's monitoring surveyor checks the work completed and the costs incurred. Delays in arranging visits can hold up payments, so build some slack into your programme.

Rolled-up and retained interest

Most development loans do not have monthly interest payments. Instead, interest is either rolled up and added to the loan, or retained from the facility at the start. Either way, it reduces the money available for the build, so it must be in your appraisal from day one.

Arrangement and exit fees

Lenders usually charge an arrangement fee and sometimes an exit fee, often as a percentage of the loan or the GDV. An exit fee based on GDV can be much larger than one based on the loan, so compare fees on the same basis.

Exit strategy

Your exit is how the loan will be repaid: selling the units, refinancing onto buy-to-let mortgages, or a mix of both. Lenders want a credible exit from the start, and development exit finance can bridge the gap while units sell or let.

How we help

We arrange development finance for ground-up builds, conversions and heavy refurbishments, and help you compare terms on a like-for-like basis. If you are building a home to live in yourself, see our guide to self-build mortgage stage payments.

Development finance for schemes you will sell or let is not regulated by the Financial Conduct Authority. Your property may be repossessed if you do not keep up repayments on any loan secured against it.