What Is Development Finance?
Development finance is short-term lending for property development projects — building new homes, converting commercial buildings, or major renovations. Interest is typically "rolled up" (added to the loan) rather than paid monthly, and repaid when the completed property is sold.
Understanding Rolled-Up Interest
Unlike standard loans where you pay interest monthly, development finance adds interest to the loan balance each month. This means the interest compounds, making the effective cost higher than the stated rate. A 12% annual rate rolled up over 18 months costs more than 18% total.