Development Exit Finance: Your Key to Project Success
Are you a property developer in the final stages of your project?
Looking to reduce borrowing expenses or free up capital for your next venture?
Development exit finance could be the answer.
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What Is Development Exit Finance?
Development exit finance is a specialised loan for refinancing existing development loans as your project nears completion.
It’s a strategic loan that helps developers shift from higher-cost development loans to more favourable terms, typically when a project is 90% complete or more.
Unlike standard development finance, which covers the entire building process, exit finance targets the final stages of a project.
It’s particularly useful when you need extra time to sell units, want to cut borrowing costs, or aim to release capital for future projects.
Key Benefits of Development Exit Finance
Lower Interest Rates
As your project approaches completion, lender risk decreases. This often results in more competitive interest rates compared to your original development loan, potentially saving you thousands of pounds.
Extended Sales Period
Development exit finance gives you valuable time to market and sell your properties without the pressure of looming deadlines. This flexibility allows you to achieve optimal sale prices rather than settling for quick, potentially undervalued sales.
Capital Release
One of the most attractive aspects of exit finance is the ability to release equity from your nearly completed project. This can provide funds to kickstart your next development, maintaining your business momentum.
Flexible Repayment Options
Many lenders offer choices in how you repay the interest, including rolled-up, retained, or serviced options. This flexibility can help manage your cash flow effectively during the final stages of your project.
How Development Exit Finance Works
Development exit finance typically offers loan amounts from £250,000 to £25 million, with some lenders extending this to £50 million for larger projects.
Loan-to-value (LTV) ratios usually range from 65% to 75%, though some lenders may offer up to 80% LTV in certain circumstances.
Interest rates for exit finance are notably competitive. These lower rates can represent significant savings compared to standard development finance rates. Arrangement fees typically range from 1% to 2% of the loan amount.
The loan term for development exit finance is usually between 3 to 24 months, providing ample time for property sales or refinancing onto long-term lending solutions. Many lenders offer no early repayment charges, allowing you to exit the loan as soon as you’ve sold your properties without incurring additional costs.
Who Can Benefit from Development Exit Finance?
Development exit finance is ideal for property developers nearing project completion but needing additional time or resources.
explore development financeIt’s particularly useful if:
You’re facing time pressures on sales and want to avoid rushed transactions at reduced prices.
Your current development loan is approaching its end date, but you need more time to sell units.
You want to reduce your borrowing costs in the final stages of your project.
You’re looking to release capital from your current project to fund future developments.
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Eligibility Criteria
To qualify for development exit finance, your project typically needs to be at least 90% complete or at the ‘wind and watertight’ stage.
Most lenders will consider a wide range of property types, including residential, commercial, and mixed-use developments.
Borrowers can be individuals, limited companies, SPVs, LLPs, or offshore entities. While having a strong track record in property development is beneficial, lenders will consider applications from less experienced developers with robust projects.
The minimum loan amount is usually around £250,000.
Can I Get Exit Finance for an Unfinished Project?
While development exit finance is primarily designed for nearly completed projects, we are able to source loans for projects that are at least 75% complete.
In these cases, the lender may also release additional funds to help finish the development. However, the loan terms and interest rates will differ from those offered for fully completed or more advanced projects.
Read more: How to Lower Your Development Loan Costs Before Final Repayment
How Long Does It Take to Secure Development Exit Finance?
The timeframe can vary, but with the right documentation and a straightforward case, it’s possible to complete the process in as little as 5 to 10 working days.
More complex cases might take 3 to 4 weeks. Working with an experienced broker like ourselves can significantly streamline this process.
When to choose exit finance
Opt for exit finance when you’re nearing project completion and looking to reduce costs, extend your sales period, or release capital. It’s particularly advantageous if your current development loan is ending but you need more time to maximise your project’s value.
Exit Finance Examples
Reducing Costs for a Multi-Unit Residential Development
A developer in Essex was nearing completion of a 20-unit apartment complex.
Their original ground up development loan was charging 1.2% interest per month. By switching to development exit finance, they saved over £50,000 in interest over a six-month period while they completed sales.
Releasing Capital for a New Commercial Project
A London-based developer had completed building a mixed-use development but wanted to start their next project before all units were sold.
Using development exit finance, they released £2 million in equity from their completed project, allowing them to secure land for their next development while continuing to market and sell the remaining units.
Why Choose Us for Your Development Exit Finance
We specialise in sourcing bespoke financial solutions for complex, high-value projects. Our extensive network of over 250 lenders, allows us to secure competitive rates and terms tailored to your specific needs.
With our expertise in million-pound-plus finance, we’re particularly well-equipped to handle large-scale development projects.
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