What is LTGDV (loan to gross development value)?

How lenders use it

A development lender sets a maximum LTGDV for each deal. Senior lenders often lend in the range of 60% to 70%, but limits vary with the lender, the scheme and the borrower. A lower limit applies to riskier projects.

The loan counted in LTGDV is usually the gross loan. That includes the money for land and build, plus interest and fees that are added to the loan instead of being paid each month. A net loan figure leaves those out, so always check which one is used.

The GDV comes from a valuer. Most lenders require a valuation by a surveyor who is a member of RICS. The valuer gives the value of the finished units as sold in a normal sale. Some also give a lower value for a quick sale, which the lender may use as a check.

LTGDV sits beside two other ratios. Loan to cost (LTC) compares the loan with the total cost of the project. Loan to value (LTV) compares the loan with what the site is worth today. The lender applies all that apply and lends the lowest result.

Worked example

Example only. A scheme has a GDV of £2,000,000. The total cost is £1,600,000. That is £600,000 for land, £850,000 for the build and £150,000 for fees and interest. The lender offers a gross loan of £1,300,000.

LTGDV is 1,300,000 divided by 2,000,000, which is 65%. LTC is 1,300,000 divided by 1,600,000, which is about 81%. If the first advance on the £600,000 site is £390,000, day-one LTV is 65%. The borrower funds the other £210,000 of the site price.

Common confusions

LTGDV is not LTV. LTV looks at today's value and is mostly used for bridging and ordinary mortgages. LTGDV looks at the future value of a scheme that has not been built.

LTGDV is not LTC. LTC looks at what the project costs. A cheap site bought below value can have a low LTC and still have a high LTGDV.

GDV is not profit. It is the total sales value of the finished scheme. Profit is GDV minus all costs. In US fix-and-flip lending, the similar term is after repair value, or ARV.

Questions lenders ask

What does LTGDV mean?

Loan to gross development value. It is the loan divided by the expected market value of the finished scheme. Development lenders use it to limit how much they lend against a project that does not exist yet.

What is the difference between LTV, LTC and LTGDV?

LTV compares the loan with the property's value today. LTC compares it with the project's total cost. LTGDV compares it with the expected value after the build. A development lender checks all three.

What is a good LTGDV for a development loan?

Senior lenders often stay around 60% to 70%. A lower figure is safer for the lender. The right level depends on the lender, the location, the type of scheme and the borrower's experience.

Who sets the gross development value?

A valuer instructed by the lender, working from the plans and local sales evidence. Borrower estimates are a starting point only. The lender uses its own valuer's figure.

Development finance: A staged loan that pays for a property build
Debenture: Security over a company's assets
Personal guarantee: An owner's promise to repay if the company cannot
Conditions precedent: What the borrower must deliver before the first draw

This page is general information for lenders. It is not legal, tax or credit advice.