Development Exit Finance

Development exit finance is a short-term facility that repays your development loan once construction is substantially complete. It replaces the more expensive development finance with a lower-cost holding facility, giving you time to sell completed units at the best market price rather than accepting discounted offers to meet your development lender's repayment deadline.

Most development loans require full repayment within 3 to 6 months of practical completion. If your units have not all sold by that point, you face penalty rates, extension fees, or even enforcement action from the lender. Development exit finance removes this pressure by refinancing the existing facility onto a purpose-built product designed for the sales period.

Exit finance rates are significantly lower than development finance rates because the construction risk has been removed. The lender is secured against completed, saleable property rather than a building site. Typical exit rates range from 0.55% to 0.85% per month, compared to 0.75% to 1.0%+ on the development facility.

Development exit finance works by refinancing your existing development loan at or near practical completion. The exit lender pays off the remaining balance on your development facility, taking a first charge over the completed property in its place. As each unit sells, the proceeds reduce the exit loan balance.

Most exit facilities operate on a reducing basis. When a unit sells and the proceeds clear the portion of debt allocated to that unit, the lender releases the charge on that specific plot. This allows you to complete individual sales without needing the lender's consent for each transaction, provided sales prices are above agreed minimum levels.

The exit facility term is typically 6 to 18 months, giving you an extended window to achieve the best possible prices on your remaining stock. If the market is soft or your sales agent advises holding for a better season, the exit facility gives you that flexibility without the pressure of an imminent development loan maturity.

One of the most significant benefits of development exit finance is capital recycling. As each unit on your current scheme sells, those proceeds are freed up rather than remaining trapped in the development facility. This means you can deploy profits from early sales into your next land acquisition or development project while remaining units continue to sell.

For property developers building a pipeline of projects, this is transformative. Instead of waiting for every unit to sell before starting the next scheme, you can overlap projects and significantly increase your annual output. A developer completing two projects per year could potentially scale to three or four by using exit finance to recycle capital more efficiently.

We recommend discussing your exit strategy at the start of your development, not at the end. By planning the transition from development finance to exit finance early, you ensure a smooth handover and avoid any gap between facilities. Our team can arrange bridging solutions for urgent situations where the development facility has already matured.

Exit finance rates typically range from 0.55% to 0.85% per month, with arrangement fees of 1-2% of the gross facility. This represents a meaningful saving compared to the development loan rates of 0.75% to 1.0%+ per month that you would otherwise be paying during the sales period.

On a development with £2 million of outstanding debt and a 9-month sales period, switching from development finance at 0.85% per month to exit finance at 0.60% per month saves approximately £45,000 in interest costs. When you factor in the potential penalty rates that development lenders charge on expired facilities, the savings can be substantially higher.

Additional costs include a valuation fee (the exit lender will instruct a fresh valuation of the completed scheme), legal fees for the refinance, and potentially an early repayment charge on your existing development facility. We model all of these costs for you to ensure the exit refinance is financially beneficial, and provide a comparison using our finance calculator.

The ideal time to arrange development exit finance is 3 to 6 months before your development facility matures or practical completion, whichever comes first. This gives sufficient time to instruct a valuation, complete the legal process, and draw down the exit facility before your development loan expires.

Many experienced developers arrange their exit finance concurrently with the development facility, agreeing indicative terms at the outset so the transition is seamless. Some development lenders offer built-in exit products that automatically convert the facility once construction completes, simplifying the process further.

If your development loan has already expired and you are facing penalty rates or enforcement pressure, we can still help. Emergency exit refinancing can often be arranged within 2 to 4 weeks through our specialist lender relationships. The sooner you act, the more options are available and the better the terms you can achieve.

Submit your scheme details in our Deal Room, including the development address, number of units, current sales position, outstanding debt, and development loan maturity date. We will review your situation within 24 hours and present exit finance options from our lender panel.

The information we need includes the practical completion certificate (or expected date), a schedule of unsold units with individual asking prices, details of any units currently under offer or reserved, the outstanding balance on your development facility, and any existing sales or rental agreements. With this information, we can approach exit lenders and secure competitive terms quickly.