At a glance
- Repays development finance at or near practical completion
- Often cheaper than staying on development finance past its term
- Can release some profit early for your next project
- Repaid from unit sales or a longer-term refinance
What is development exit finance?
Development exit finance, sometimes called an exit bridge or sales period finance, is a bridging loan used to refinance a development once the build is complete or close to it. It replaces the development loan and is repaid as the units are sold or when the scheme moves onto longer-term finance.
Development finance is priced for construction risk. Once the building is finished that risk is much lower, so moving onto an exit product can reduce your monthly cost.
When developers use it
- The development loan term is ending and units have not all sold
- The development lender charges penalty rates for running past the term
- You want to release some equity to fund a deposit on the next site
- You want to hold units for longer to achieve better sale prices, or to let some
What lenders look for
Lenders usually want the scheme at or near practical completion, with a valuation of the finished units. Expect them to look at sign-off from building control, a warranty such as an NHBC or similar new-build warranty, local sales evidence and your sales strategy. Lending is commonly based on the value of the unsold units, with maximum LTVs often in the region of 70% to 75%.
How repayment works
Development exit loans are normally repaid as each unit sells, with a set amount or percentage of each sale going to the lender. Terms commonly run from 6 to 24 months. Make sure the release amounts still leave the scheme workable if prices soften.
Development exit vs development finance
Development finance funds the land and build costs in stages during construction. Development exit finance only starts once the building work is essentially finished. They are often used one after the other on the same scheme. Our page on refurbishment bridging loans covers smaller projects where a single bridge can fund purchase and works.
Frequently asked questions
When can I use development exit finance?
Usually when the development is at or close to practical completion, often with building control sign-off and a new-build warranty in place.
Is development exit finance cheaper than development finance?
Often, because the construction risk has gone. The actual saving depends on the two rates and fees.
Can I release equity with development exit finance?
Some lenders will advance more than the outstanding development loan, allowing you to release some profit early.
How is a development exit loan repaid?
Normally from the sale of each unit, with an agreed amount going to the lender on each sale, or by refinancing onto a longer-term loan.
Is development exit finance regulated?
No. It is a business loan for property development, so it is not regulated by the FCA.
Important: Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Think carefully before securing other debts against your home.
This page is general information, not financial advice. Bridging Finance Comparison is a free to use lead generation service run by The Lead Advisory Company Limited. We are not a lender and do not give advice. We introduce enquiries to Curzon Financial, who are authorised by the Financial Conduct Authority (FCA), who may provide advice and arrange finance where appropriate. Rates, fees and criteria depend on your circumstances and the lender.