LTC, LTV and LTGDV are three of the most important measures used in development finance.

They all describe leverage.

But they measure it against different parts of the project.

Broadly:

LTC – Loan to Cost

compares the loan with the cost of the development.

LTV – Loan to Value

compares borrowing with the property’s current value.

LTGDV – Loan to Gross Development Value

compares borrowing with the expected value of the completed development.

Understanding the difference matters because a development lender rarely looks at only one figure.

A project might have an acceptable LTC but an excessive LTGDV.

Another may have a low current LTV because the developer already owns valuable land, while still requiring substantial construction finance.

The useful question is therefore not simply:

“What percentage will the lender fund?”

It is:

“What is that percentage being measured against?”

What is LTC in development finance?

LTC means Loan to Cost.

It measures the amount of development borrowing relative to the total cost of the project.

A simplified calculation is:

Loan ÷ Total Project Cost × 100 = LTC

For example:

Total project cost: £5 million

Loan: £4 million

The LTC would be:

80%.

That means the lender is funding an amount equivalent to 80% of the overall project cost, while the remaining capital needs to come from the developer or another agreed source.

Shawbrook describes Loan to Cost as the ratio between the total loan amount and the total cost of the project.

What counts as total project cost?

That depends on the lender and the scheme.

The development appraisal may include costs such as:

site acquisition;

Stamp Duty Land Tax where applicable;

construction;

professional fees;

planning costs;

building control;

utilities;

contingency;

sales and marketing costs;

and potentially finance-related costs, depending on the lender’s methodology.

The exact definition used for LTC should therefore be checked.

Two lenders can both refer to “80% LTC” while using slightly different cost bases.

Why does LTC matter?

Because it shows how much of the development is being funded through debt rather than developer capital.

Higher LTC generally means the developer needs to contribute less equity.

For example:

70% LTC

means a greater developer contribution than:

85% LTC

assuming everything else is identical.

That can improve capital efficiency for the developer.

But higher leverage also leaves less room if:

costs increase;

the project is delayed;

or values fall.

Higher LTC reduces the developer’s initial cash requirement. It does not reduce the project’s overall financial risk.

Does 80% LTC mean the lender pays 80% of every cost?

Not necessarily.

This is an important distinction.

The overall facility may represent 80% LTC, but the funding mechanics could involve:

the developer contributing equity first;

the lender funding a different proportion of acquisition;

and construction funds being released through staged drawdowns.

For example, Shawbrook currently states that certain development facilities can reach 85% LTC while requiring cash or equity contribution ahead of bank funding.

The headline LTC therefore does not tell you exactly when each party provides their capital.

Can a lender fund 100% of the build costs and still be below 100% LTC?

Yes, potentially.

Suppose:

Land and other project costs: £2 million

Construction costs: £3 million

Total cost: £5 million.

The developer contributes the £2 million land and acquisition equity.

The lender then funds the £3 million construction cost.

The lender is funding 100% of the construction budget.

But its overall LTC is only:

60%.

This is why:

percentage of build costs funded

and

total LTC

are not the same thing.

What is LTV in development finance?

LTV means Loan to Value.

It compares borrowing against the value of the property securing the loan at a particular point in time.

A simplified calculation is:

Loan ÷ Property Value × 100 = LTV

For example:

Current property value: £2 million

Loan secured against it: £1.2 million

The LTV would be:

60%.

LendInvest describes LTV broadly as the ratio of the relevant secured borrowing to the appraised value of the property.

Which property value is used for LTV?

That depends on what stage the project has reached and what the lender is measuring.

For example, the lender may consider:

current site value;

existing-use value;

value with planning;

purchase price;

or another current valuation basis.

This needs to be distinguished from the value after development.

That future completed value is normally considered through GDV and LTGDV.

Why is LTV relevant when development finance is mainly about LTC and LTGDV?

Because the lender also cares about the security it holds today.

Suppose a developer already owns a site outright worth £3 million.

They require £1 million initially before construction drawdowns begin.

The day-one LTV may be relatively low.

That gives the lender a strong starting security position.

Another developer might be buying a site with a high initial advance relative to the acquisition value.

The projects could ultimately have identical GDVs while presenting very different day-one risks.

What is day-one LTV?

Day-one LTV is broadly the initial borrowing compared with the current value of the property at the start of the facility.

This can be especially important where the lender is financing:

site acquisition;

refinancing an existing property;

or a conversion where substantial value already exists.

For example:

Site value at completion of the loan: £2 million

Initial advance: £1.3 million

Day-one LTV is approximately:

65%.

Further development funds may then be drawn later.

Is LTV based on purchase price or market value?

It depends on the lender and transaction.

If a property has just been purchased, a lender may consider:

purchase price;

market value;

or the lower of relevant figures

according to its own policy.

This can be particularly important where a developer is buying:

below market value;

from a connected party;

or after creating planning uplift.

The lender’s valuation methodology should be understood rather than assumed.

What is GDV?

GDV means Gross Development Value.

It is the anticipated market value of the property once the development is completed.

For example, a scheme containing:

10 apartments worth £500,000 each

might have an aggregate GDV of approximately:

£5 million.

The valuation needs to be supported by professional evidence.

GDV is a projected completed value.

It is not guaranteed future sale proceeds.

Shawbrook defines GDV as the projected value of a property development once completed.

What is LTGDV?

LTGDV means Loan to Gross Development Value.

It compares the development debt with the expected value of the completed scheme.

A simplified calculation is:

Loan ÷ GDV × 100 = LTGDV

For example:

Gross development value: £8 million

Development loan: £5.2 million

The LTGDV is:

65%.

LendInvest defines LTGDV broadly as the development loan, including relevant anticipated interest and fees under its methodology, compared with the appraised value of the property assuming development has been completed.

Why does LTGDV matter?

Because it shows how much value buffer is expected to remain between:

the development debt

and

the completed property value.

For example:

60% LTGDV

provides a larger projected value cushion than:

75% LTGDV.

That cushion can help absorb:

lower sales values;

additional costs;

delayed sales;

and increased finance costs.

The lender wants confidence that the completed development will provide enough value to support and repay the debt.

Is a lower LTGDV always better?

From a lender-risk perspective, lower leverage can generally provide more security.

But from the developer’s perspective, using less debt means committing more equity.

The appropriate structure therefore balances:

lender risk;

developer capital efficiency;

project profitability;

and financial resilience.

The lowest possible leverage is not automatically commercially optimal.

Neither is the highest.

Why do lenders use both LTC and LTGDV?

Because each measures a different risk.

LTC asks:

How much of the project cost is being funded by debt?

LTGDV asks:

How much of the expected completed value will be represented by debt?

A lender wants both to remain acceptable.

Consider two developments with the same total costs but very different values.

Development A

Total cost: £5 million

GDV: £8 million

Loan: £4 million

LTC = 80%

LTGDV = 50%

Development B

Total cost: £5 million

GDV: £5.5 million

Loan: £4 million

LTC = 80%

LTGDV = approximately 73%.

The LTC is identical.

The lender’s completed-value risk is not.

Can the LTGDV cap reduce the amount available even if LTC is acceptable?

Yes.

This is one of the most important concepts in development finance.

Suppose a lender is prepared to offer up to:

85% LTC

subject also to:

65% LTGDV.

Project figures are:

Total cost: £4 million

GDV: £5 million.

85% LTC would theoretically support:

£3.4 million.

But 65% LTGDV would support only:

£3.25 million.

The LTGDV cap therefore becomes the limiting factor.

The developer may receive less than the maximum LTC initially suggests.

Can LTC be the limiting factor instead?

Yes.

Take another project:

Total cost: £5 million

GDV: £10 million.

At 65% LTGDV, the theoretical limit would be:

£6.5 million.

But the project only costs £5 million.

If the lender’s maximum is 85% LTC, that limit would instead be:

£4.25 million.

In this case, LTC constrains the facility.

This is why lenders assess the metrics together.

What does “subject to the lower of LTC and LTGDV” mean?

It broadly means the maximum loan is constrained by whichever calculation produces the smaller acceptable amount.

For example:

Maximum under LTC: £4.25 million

Maximum under LTGDV: £3.9 million

The maximum may therefore be around:

£3.9 million

before considering other lender requirements.

The project must fit within all relevant limits, not simply one of them.

How does LTV interact with LTC and LTGDV?

LTV can add another constraint, especially at acquisition.

A lender may be comfortable with:

overall LTC;

and overall LTGDV,

while still limiting the amount it advances against the site on day one.

For example, the lender may not want to fund an acquisition at an excessively high initial LTV.

The development facility can therefore contain three separate leverage tests:

day-one LTV

overall LTC

and

overall LTGDV.

Why is day-one leverage important?

Because construction value has not yet been created.

If the project encounters a major problem immediately after acquisition, the lender’s security may consist largely of the existing site or building.

It therefore wants sufficient protection at the beginning as well as at completion.

Development finance is underwriting a value journey.

The lender needs comfort at multiple points along that journey.

Can a development have low LTV but high LTC?

Yes.

Suppose the developer already owns valuable land outright.

The current value may provide substantial equity.

But the construction costs could be large relative to the total project cost.

The initial LTV may therefore be low while the overall LTC becomes much higher once development finance is included.

These figures measure different things.

Can a development have high day-one LTV but low LTGDV?

Potentially.

A developer may purchase a site with a relatively high initial advance, but the proposed scheme may create substantial value.

For example:

Site value: £2 million

Initial debt: £1.3 million

Day-one LTV: 65%

The completed development might later have:

GDV: £8 million

with total development debt of:

£4 million.

LTGDV: 50%.

The lender still needs to be comfortable with the initial security risk.

Does planning permission affect LTV?

Potentially.

Planning can materially affect current land value.

A site without planning may be worth substantially less than the same site with an implementable residential consent.

If planning is achieved before development finance is arranged, the lender’s valuation may therefore reflect a higher current value.

This can reduce current LTV and create embedded developer equity.

What is planning uplift?

Planning uplift is the increase in land or property value created when stronger development rights are secured.

For example:

Site acquired without planning: £1 million

Value after planning: £1.7 million

The £700,000 difference represents substantial value creation.

Depending on lender criteria, some of that embedded equity may help support the development finance structure.

Can planning uplift count towards the developer’s equity?

Potentially.

A developer who acquired the site with their own capital and subsequently achieved planning may have significant equity without needing to contribute the same amount of new cash at development stage.

Different lenders treat this differently.

They may consider:

original purchase price;

current valuation;

time since acquisition;

planning status;

and developer contribution.

The precise policy matters.

Does LTC include land value or land purchase price?

Generally, total project cost will incorporate the relevant site acquisition cost or another lender-approved basis.

But methodologies vary.

A developer who already owns a site may therefore find that lenders calculate project cost and equity differently.

This is why headline LTC percentages should not be compared without understanding the underlying calculation.

Does LTGDV include interest and fees in the loan figure?

This can vary by lender.

Some lenders calculate LTGDV using a gross facility, potentially including retained interest and fees.

Others may describe net and gross leverage separately.

For example, LendInvest’s published definition of LTGDV includes principal together with anticipated interest and fees under its methodology.

The distinction between:

net loan

and

gross facility

is therefore important.

What is a gross development finance facility?

A gross facility may include more than the cash actually available to fund:

acquisition;

and construction.

It can potentially include amounts allocated towards:

retained interest;

lender fees;

and other agreed financed costs.

For example:

Gross facility: £5 million

does not necessarily mean the developer receives £5 million to spend on the development.

The net usable amount may be lower.

Why does retained interest affect leverage?

Because retained interest is still part of the debt.

Suppose:

Net development funding: £4.5 million

plus

retained interest and fees: £500,000.

The gross facility is:

£5 million.

If the lender uses the gross figure when calculating LTGDV, the leverage is higher than if only the £4.5 million net funding were used.

This is why developers should understand precisely which loan figure each percentage refers to.

What is retained interest?

Development lenders may structure interest so that it is retained or rolled within the facility rather than paid monthly from the developer’s external cash flow.

This can be useful during construction when the property may not yet generate income.

But retained interest consumes facility capacity.

It is still a cost of borrowing.

Does LTC include finance costs?

Potentially, depending on the lender’s definition of total project cost.

Some development appraisals include finance as part of the overall cost base.

A lender’s credit calculation may treat it differently.

The borrower should therefore distinguish between:

development appraisal cost;

lender LTC definition;

and gross facility calculation.

These figures can look similar while measuring slightly different things.

Why can two lenders quote the same LTC but offer different amounts?

Because their methodology can differ.

They may use different:

cost definitions;

valuation assumptions;

initial LTV limits;

LTGDV caps;

interest treatment;

fees;

and drawdown structures.

For example, two lenders may both advertise:

80% LTC.

One may offer a materially larger usable facility because its:

initial advance;

interest treatment;

or LTGDV constraint

is different.

A headline percentage is not a complete development finance offer.

Why can one lender’s 70% LTGDV be more useful than another’s?

Because leverage is only one part of the structure.

The developer should also consider:

rate;

arrangement fee;

interest calculation;

retained interest;

drawdown mechanics;

unit release prices;

term;

exit fee;

and extension provisions.

A slightly lower LTGDV may still result in a more appropriate facility if the overall mechanics fit the development better.

Are maximum LTC and LTGDV figures fixed across the market?

No.

They vary by lender, project and market conditions.

For example, Shawbrook currently advertises development finance at up to 85% LTC with maximum gearing of 65% LTGDV for new-build development and 70% LTGDV for refurbishment on certain products.

Those are lender-specific current parameters, not universal market rules.

Another lender may use different limits.

Can experienced developers get higher leverage?

Potentially.

Lender appetite can be influenced by:

track record;

balance sheet;

location;

project quality;

and wider relationship.

A recent Shawbrook transaction, for example, was structured at 70% LTGDV and specifically referenced the developer’s strong track record and successful exits on comparable local schemes.

But experience does not automatically override project economics.

Can first-time developers get lower LTC or LTGDV?

Potentially.

A lender may take a more conservative approach where the borrower has limited development experience.

That could involve:

lower leverage;

more developer equity;

stronger professional support;

or tighter controls.

The precise treatment varies by lender.

Experience is one component of the wider risk assessment.

How does mezzanine finance affect LTC?

Mezzanine finance introduces additional debt behind the senior lender.

This makes it important to distinguish:

senior lender LTC

from

total debt LTC.

For example:

Senior debt: 70% of cost

plus

Mezzanine debt: 10% of cost

means total project debt may represent:

80% of cost.

The senior lender may still describe its own facility as 70% LTC.

The complete project is more highly leveraged.

How does mezzanine finance affect LTGDV?

The same principle applies.

A senior development facility may sit at:

60% LTGDV.

If mezzanine debt takes total borrowing to:

70% LTGDV,

the project’s real debt exposure is higher.

Developers should therefore analyse leverage across the entire capital stack rather than only the senior lender’s headline number.

What is combined leverage?

Combined leverage looks at all relevant borrowing across the project.

This can include:

senior development finance;

mezzanine debt;

and other secured or subordinated borrowing.

It gives a more complete picture of how much genuine equity sits beneath the debt.

This matters particularly when assessing project resilience.

Why does genuine developer equity matter?

Because equity absorbs losses before debt.

Suppose the completed value falls.

A project with:

50% LTGDV

has significantly more value cushion than one with:

75% total debt LTGDV.

The lender and developer therefore need to understand how much genuine capital remains exposed beneath the debt.

Does a higher LTC improve developer returns?

Potentially.

Using more debt means the developer can commit less of their own cash.

If the development performs strongly, this can improve the percentage return on developer equity.

But higher leverage also means:

more interest;

less financial cushion;

and greater sensitivity to poor outcomes.

Leverage can amplify both returns and losses.

How does a cost overrun affect LTC?

Suppose:

Original cost: £5 million

Loan: £4 million

Original LTC:

80%.

Costs then increase to:

£5.5 million.

If the loan remains £4 million, actual LTC falls to approximately:

73%.

But that does not necessarily help the developer.

They still need to find the additional £500,000 required to finish the development.

This demonstrates why LTC should not be considered in isolation from:

cost to complete.

What if the lender increases the loan to cover the cost overrun?

Then leverage may remain high.

If the lender increases the loan from:

£4 million

£4.5 million

against £5.5 million of total cost, LTC becomes approximately:

82%.

But the lender will also need to consider LTGDV.

If completed value has not risen, the additional debt reduces the value cushion.

How does a fall in GDV affect LTGDV?

This can be particularly important.

Suppose:

Loan: £5 million

Original GDV: £8 million

LTGDV = 62.5%.

The market weakens and revised GDV becomes:

£7 million.

The same £5 million loan now represents approximately:

71.4% LTGDV.

Nothing about the debt changed.

The development became more highly leveraged because the expected completed value fell.

Why do lenders stress-test GDV?

Because completed values are estimates.

The lender may want to understand what happens if:

values fall 5%;

values fall 10%;

sales take longer;

or the development has to be sold more quickly than expected.

A project that only works at the original headline GDV may contain limited resilience.

Can strong developer profit reduce LTGDV?

Often, a development with strong profit will naturally have a larger gap between:

total cost;

and GDV.

That can make it easier for a lender to satisfy both:

LTC;

and LTGDV

constraints.

For example:

Cost: £5 million

GDV: £8 million

creates more room than:

Cost: £5 million

GDV: £5.8 million.

The lender is ultimately assessing whether enough value is being created.

What is profit on cost?

Profit on cost compares projected development profit with the cost of the project.

A simplified calculation is:

Projected profit ÷ Total development cost × 100

Lenders can consider this alongside LTC and LTGDV.

LendInvest’s current development finance calculator, for example, displays LTC, LTGDV, developer equity contribution and profit on cost together when illustrating a project.

That reflects how interconnected these measures are.

Why is profit margin not the same as LTGDV?

Because they answer different questions.

Profit measures the developer’s projected commercial return.

LTGDV measures debt relative to completed value.

A project can have an acceptable LTGDV but a weak profit margin if costs are too high.

Likewise, a highly profitable scheme could still be aggressively leveraged if the borrower takes substantial debt.

Both economics and financing need to work.

Can the maximum LTC change during the development?

The original facility is agreed against the approved project.

If:

costs change;

scope changes;

valuation changes;

or additional borrowing is requested,

the lender may reassess leverage.

The headline maximum quoted at the start is not necessarily an unconditional entitlement throughout the development.

Can LTGDV change during construction?

Yes.

GDV can be revalued.

The outstanding or projected gross debt can also change because of:

interest;

delays;

additional borrowing;

or cost overruns.

Actual leverage can therefore move even where the original facility structure looked conservative.

Can completed sales improve the lender’s leverage position?

Potentially.

Once units begin selling, sale proceeds can reduce the development debt.

This lowers the outstanding loan.

The remaining leverage then needs to be considered against the remaining unsold security.

This is why unit release mechanisms matter on multi-unit developments.

What happens to LTC after completion?

LTC becomes less central once the development costs have been incurred.

At that point, the lender’s focus shifts more towards:

current value;

remaining debt;

unit sales;

and exit.

Development exit lenders may therefore focus more heavily on the completed or near-completed asset and its current leverage.

What happens to LTGDV after completion?

Once the development is actually complete, GDV becomes less hypothetical.

The lender can assess the finished property and available sales evidence.

A completed development may therefore be considered more directly through current value and LTV.

The terminology can shift as construction risk disappears.

Is LTGDV the same as end-value LTV?

They are closely related conceptually but not always identical in lender methodology.

LTGDV specifically refers to lending measured against the projected completed gross development value.

Once the project is completed, lenders may instead refer to LTV against the current completed valuation.

It is important to use the lender’s definitions when comparing offers.

What metric matters most?

There is no single answer.

The lender may need all three.

LTV

shows the strength of the current security.

LTC

shows how much of the development cost is being funded through debt.

LTGDV

shows the projected leverage against the completed scheme.

Together they answer:

Where are we starting?

How is the project being funded?

And what does the debt look like against the value expected at the end?

Which metric matters most to the developer?

That depends on the objective.

A developer focused on minimising the initial cash contribution may pay particular attention to:

LTC.

Someone who already owns a valuable site may focus on:

day-one LTV and equity release.

A developer concerned about overall gearing and exit may focus heavily on:

LTGDV.

In practice, the facility needs to work across all three.

Should developers simply choose the lender with the highest LTC?

No.

A high LTC may look attractive because it reduces the required equity contribution.

But it could come with:

lower day-one LTV;

tighter LTGDV;

higher pricing;

restrictive drawdowns;

expensive exit fees;

or less flexibility.

The whole facility needs to be compared.

Is a higher LTGDV always better for the developer?

Not necessarily.

It can allow the developer to use more debt.

But higher debt can also mean:

greater finance cost;

smaller value cushion;

increased exit risk;

and higher sensitivity to lower GDV.

Maximum leverage should be treated as an available limit, not a target.

Why can headline development finance percentages be misleading?

Because a statement such as:

“Up to 85% development finance”

does not tell you:

whether that means LTC or LTV;

what day-one advance is available;

what LTGDV cap applies;

whether interest is retained;

how fees affect the gross facility;

when developer equity is injected;

or how drawdowns work.

The denominator matters.

So does the rest of the facility.

What should a developer ask when given an LTC figure?

Useful questions include:

What costs are included in the denominator?

Is the percentage based on net or gross borrowing?

When does my equity need to be introduced?

How much of the build cost is actually funded?

What LTGDV cap also applies?

What day-one LTV applies?

Are interest and fees included in the facility?

These questions turn a headline percentage into something commercially useful.

What should a developer ask about LTGDV?

Potentially:

Is LTGDV calculated on the gross or net facility?

Which GDV is being used?

Does the lender use aggregate individual unit values?

How does it treat bulk value?

What happens if the valuation is lower than expected?

Are interest and fees included?

The definition needs to be understood before two lender offers can be compared properly.

What should a developer ask about LTV?

Potentially:

What day-one value is being used?

Is borrowing limited against purchase price or valuation?

Is planning uplift recognised?

How is existing land equity treated?

Will the property be revalued during the project?

Again, the methodology matters.

How should LTC, LTV and LTGDV be assessed together?

A useful framework is:

1. Current security — LTV

What is the property worth today and how much debt sits against it?

2. Project funding — LTC

How much does the entire scheme cost and what proportion is being financed?

3. Completed value — LTGDV

What is the development expected to be worth when finished and how much debt will exist against that value?

4. Developer equity

How much genuine capital is the developer contributing?

5. Project resilience

What happens if costs increase or GDV falls?

6. Exit

Can the completed property realistically repay or refinance the debt?

These metrics should support the commercial logic of the development rather than replace it.

How Henry Dannell can help

At Henry Dannell Private Clients, we assess development finance beyond the headline leverage percentage.

A lender might advertise:

85% LTC

65% LTGDV.

Those figures are useful.

But they do not tell us on their own how much usable capital the developer will actually receive or when it will become available.

We therefore consider:

day-one advance;

current LTV;

total project cost;

LTC;

gross and net facility;

retained interest;

LTGDV;

developer equity;

staged drawdowns;

cost-to-complete requirements;

and

the final exit.

For one developer, maximising LTC may be particularly important because capital needs to be preserved for another scheme.

Another may already have significant land equity and care more about how much can be released on day one.

A highly profitable project may comfortably satisfy the lender’s LTGDV cap while a lower-margin scheme reaches that constraint well before the maximum LTC.

And where mezzanine finance is introduced, the total combined leverage needs to be distinguished from the senior lender’s figures.

The objective is not simply to find the largest percentage.

It is to establish how much genuine development capital the structure provides, how much equity the developer needs to commit and whether the resulting debt remains appropriately supported by the completed scheme.

The takeaway

LTC, LTV and LTGDV all measure leverage in development finance.

But they look at different parts of the project.

LTC — Loan to Cost

measures borrowing against the cost of the development.

LTV — Loan to Value

measures borrowing against the property’s current value.

LTGDV — Loan to Gross Development Value

measures borrowing against the expected value of the completed development.

A lender may apply limits to all three.

That means the amount available can be constrained by whichever metric produces the lowest acceptable loan.

The useful question is therefore not simply:

“What percentage will the lender offer?”

It is:

“Is that percentage measured against today’s property value, the cost of delivering the project or the value expected when it is finished?”

That distinction is fundamental.

Development finance percentages only become meaningful once you understand what sits underneath them.

Important information

This article is for general information only and does not constitute personal lending, development, investment, valuation, legal, tax or financial advice.

Definitions and calculation methodologies for LTV, LTC, LTGDV, gross facility, project cost and other development finance metrics can vary between lenders and facilities. The relevant lender’s methodology and legal documentation should be checked in each case.

Maximum leverage, borrower-equity requirements, interest, fees, drawdown conditions and security depend on the borrower, project and lender at the relevant time.

Gross Development Value is an estimate of completed property value and is not guaranteed. Development costs can increase, and property values can fall as well as rise.

Development finance may be unregulated depending on the transaction. Any property or other asset used as security may be at risk if borrowing secured against it is not repaid.