The 8.95-acre former National Grid site has planning consent for 607 homes, in addition to retail- or community-use floorspace.
It is part of a brownfield development close to amenities, and will offer communal and private open spaces.
The Octopus facility will be used to refinance current debt, acquire the remaining part of the site, and fund the ground works and removal of a decommissioned gas holder.
Work will start on the development later this month with the remediation and infrastructure works, to then allow for the construction of the new homes.
The £18.3m facility is the next funding milestone in the £85m GDV development journey.
Moda Living has exchanged contracts for the PRS element of the site, while North Star will continue to develop 215 open-market sale units.
“The Heworth site … has taken many years to get to a position where works can commence, and we are proud to be involved,” said Ludo Mackenzie, head of commercial property at Octopus Real Estate.
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Tom Frank, managing director at Ice Cubed Commercial Finance — who acted as the adviser — commented that arranging the finance on this development had been complex, especially in the current challenging conditions.
“Successful closing of the deal is testament to our close relationship with Octopus Real Estate and the client.
“We are very proud to play our part in delivering this fantastic high quality development so close to our York office.”
A spokesperson for North Star added: “The journey to transform this large, brownfield site into a vibrant new community has taken over 18 months so far, and we are very excited to see it now coming to fruition.
“This will now enable us to start construction works on the site, and the first step will be to remediate the site, which will start very shortly.
“Our aim is to create a high quality sustainable development that York can be proud of and we are committed to delivering the development, even in these challenging times."