What loan to cost means
Loan to cost (LTC) is the loan divided by the total cost of the project: the land or site price plus the build costs, professional fees and contingency. A £1,800,000 loan on a £2,600,000 project is 69.23% loan to cost, so you are putting in the other 30.77%, which is £800,000.
Development lenders set a maximum loan to cost, which varies with the lender and the project, together with a maximum loan to GDV. Treat the percentages on this page as editable illustrations and enter the limits in your own term sheet.
Two limits: cost and GDV
Lenders apply both a loan-to-cost limit and a loan-to-GDV limit, and the loan cannot exceed whichever is lower. When costs are high compared with the end value, the GDV limit is the one that bites. When costs are low compared with the value, the cost limit does. The calculator works out the most each limit allows and takes the lower figure.
Worked example: a £2.6 million project
A project has a £600,000 site, £1,800,000 of build costs and £200,000 of professional fees and contingency, so the total project cost is £2,600,000. The GDV is £3,900,000 and you ask for £1,800,000. That is 69.23% loan to cost and 46.15% loan to GDV.
With a 75% loan-to-cost limit, the lender could lend up to £1,950,000. A 65% loan-to-GDV limit allows £2,535,000, so the lower, cost-based figure of £1,950,000 is the most available. Your cash needed for the £1,800,000 loan is £800,000, and the least the limits allow is £650,000. If you asked for £2,100,000 instead, loan to cost would be 80.77%, above the 75% limit.
What counts as cost, and what this page leaves out
Some lenders count only land and build costs, others include professional fees, contingency and even finance costs in the cost figure. This calculator uses the costs you enter and leaves finance costs out, so it matches the loan-to-cost figure on the development loan calculator. It does not model the lender's valuation, a day-one land advance or staged drawdown timing, and it is not a decision in principle.
To add interest, fees and profit after finance, use the UK development finance calculator .
Once the build is finished, use the UK development exit loan calculator .
Use the right country page
This page stays in pounds and uses UK terms: development finance, GDV and professional fees. The country choices above the inputs open separate local pages. Choosing United States opens the US construction loan to cost calculator, which uses ARV, hard and soft costs. The inputs reset and amounts are not converted.
Inputs for the development loan to cost calculator
Land or site purchase price
What you pay for the land or site, before finance costs.
Build costs
Construction costs for the whole build, before finance costs.
Professional fees and contingency
Other project costs the lender counts as cost.
Gross development value (GDV)
Expected value of the finished project, for example its sale prices.
Loan you are asking for
The total loan in your term sheet, land and build funding together.
Lender's maximum loan to cost
The lender's cost-based limit. The 75% shown is only an illustration.
Lender's maximum loan to GDV
The lender's value-based limit. The 65% shown is only an illustration.
CALCULATOR QUESTIONS
UK development loan to cost calculator questions
How do you calculate loan to cost?
Divide the loan by the total project cost and multiply by 100. £1,800,000 divided by £2,600,000 is 69.23%.
What loan to cost can I get for development finance?
It depends on the lender, the project and your experience. Enter the limit in your own term sheet rather than relying on a typical figure.
What is the difference between loan to cost and loan to GDV?
Loan to cost compares the loan with what the project costs. Loan to GDV compares it with what the finished project is worth. Lenders usually apply both.
Are finance costs part of the cost?
Some lenders include them and some do not. This calculator uses only the costs you enter, so add interest and fees to the other costs if your lender counts them.
What happens when I change country?
The United States option opens the separate US construction loan to cost page, in dollars, with ARV and hard and soft costs. Your inputs are reset rather than converted.