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Development exit finance
Nearing the end of a project? Development exit finance can give you more time to sell, refinance or complete final works.
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Can I get development exit finance?
Essentially, if you have development finance borrowing in place, you will be eligible with most lenders. This is because your existing lender will have checked you are a suitable applicant. You just need to have enough equity in your property.
You would typically use development exit finance on larger scale projects where many properties are being built.
You can use this type of lending if you have run out of time or the money to finish a project you are currently working on. It can provide a very useful cash injection at the critical end point of a build. You can then sell, or refinance with long-term borrowing – we can help you with this too.
Factors that may impact you getting development finance
Factors that may impact your ability to receive development exit finance would be:
- Some types of adverse credit.
- Not having enough equity to refinance.
- A large proportion of the properties are not yet ready to sell.
- Your properties are not wind and water tight.
Today's development exit finance rates
Build projects requiring development exit finance are complex. Our advisors will need the details of your case to give you an interest rate, based on today’s lender options. Enquire online now.
Is development exit finance right for you?
This page explains how development exit finance works as a short-term refinancing tool near project completion, including eligibility and property readiness requirements. Our advisers often see development exit cases depend on how close the project is to completion, remaining works, sales progress, refinance options and the amount of equity already in the scheme.
Who this is for
For developers nearing completion who need more time or capital before sale or refinance.
Who this is not for
Not for early-stage developments, projects that are not wind and watertight, or borrowers who do not yet have enough equity to refinance.
Criteria for development exit finance
- You can borrow against ground-up residential or commercial developments
- You can borrow against multi-unit projects
- Commercial to residential conversions are accepted
- Heavy refurbishments are accepted
- The properties must be wind and water tight
- Your deposit must be at least 25% of the total unit value
- The exit finance must be the only borrowing in place
- You can invest in personal name
- You can invest via a trading limited company or Special Purpose Vehicle.
- You can borrow for up to 24 months
Eligibility for development finance
- You can be a first time buyers or experienced investor
- You must be at least 18 years old
- Minimum deposit 25 per cent of unit value
- Upper age limits at application are flexible
- Low personal incomes are accepted
- Property, pension and employment income is OK
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What is development exit finance?
Development exit finance is a type of bridging loan used by developers near the end of the build cycle.
While development exit finance is typically considered a ‘Plan B’, used when you are facing challenges in completing a project. It is a type of borrowing you can fall back on, rather than borrowing you would plan to use.
If you want to apply, you will need to:
- Provide a viable exit strategy (e.g. sale of property or refinance to long-term borrowing)
- Provide collateral (you must have equity in the property based on its market value to be able to take out an exit finance loan)
- Evidence of work completed (to include planning permission and warranties etc.)
What can I use development exit finance for?
You can use this type of borrowing if you need more time, or money to complete a ground up build project that has overrun in time, or run out of cash to complete works.
Development exit finance can also be used to raise capital in order to meet other financial obligations. It can provide you with the time you need to sell your finished unit(s).
Developers may find it makes financial sense to simply switch to development exit finance near the end of the build cycle, as rates can be slightly lower than development finance, in some cases.
How much can you borrow with development exit finance?
There is no upper limit to the cash sum you are able to borrow with development exit finance, however, you will typically be able to get 75 per cent of the market value of the property.
This will depend largely on the details of your case, your experience, credit worthiness, and amount of equity you have to put down.
Costs involved with development exit finance
Lenders may charge you for the valuation conducted on your property. They often also charge a product fee, sometimes this can be added to the mortgage.
You will need a conveyancing solicitor who will charge fees. Read our guide to choosing a conveyancing solicitor.
We charge a broker fee for our work. You pay in two parts. A booking fee, once we have found you a mortgage deal, at application. The majority of our fee is paid at completion of the mortgage.
Every development finance loan comes with monthly costs based on the interest rate the lender charges. These are paid on either an interest-only basis.
How to apply for development exit finance
1
Tell our advisors about the property you are investing in, your needs and circumstances. If you have credit concerns, chat to us about them, so we can put you with the right lender.
2
Your advisor will find the best possible deal from a search of thousands of products. They will get you a lender decision in principle, this requires a soft credit search (occasionally it is a hard credit search).
3
Your advisor will call to discuss the product they have found for you. You will be presented with one mortgage that is the best match for all your needs and offers you the most cost effective option.
4
On your instruction, your advisor will submit your mortgage application. Your account manager then does all liaison and administrative work to complete the deal, whilst keeping you updated at every step.
Why choose Commercial Trust?
Apply with ease by phone
It couldn't be easier to secure a mortgage with our expert advisors. Ask all your questions and arrange an application on the phone from your sofa.
World class customer service
We'll find you a great deal and take all the admin work off your shoulders, so you can relax while we get your mortgage completed. All the while giving you progress updates.
Specialist expertise
We specialise solely in property investment solutions, which means that you will get a recommendation based on detailed knowledge of the latest deals available.
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Frequently asked questions
How does development exit finance work?
Development exit finance works much like any other loan. There is a cash lump sum, interest, and term length. However, because of what development exit finance is funding (a large construction), funds can be released in stages (or ‘drawdowns’).
A drawdown means that once you have agreed the terms of the loan, you’ll receive portions of the total borrowing as you different stages of development.
Development exit finance works in a similar way to development finance, in that both have drawdown facilities that borrowers may use in order to fund portions of the build. Development exit finance is likely to need fewer drawdowns, as it is usually taken out at the end of the build cycle.
A development exit loan will only be able to be taken out once the newly built properties are wind and water tight, at a minimum.
What is the meaning of an exit loan?
In the context of property development, development exit loans can either buy you more time to complete the units/sell, inject further cash in order to complete, or can be a cost cutting move as you progress to the final stages of development.
The development exit loan will pay off your previous borrowing, so you will stop paying interest on any prior loans and start paying based on your new terms and conditions.
What are the stages of development?
The stages of property development include purchasing the land, securing financing, all stage of the build cycle, then exiting the loan via sale or long-term financing. Property development finance is a complex venture, but potentially lucrative with the right amount of planning, project management, and understanding of real estate.
For a more comprehensive look at property development, read through to read our guide on development finance.
How long does a development exit finance application usually take?
Timeframes can vary depending on the urgency. If it’s needed very urgently, it is possible to complete within a week, so long as all parties (you, us, the lender and the solicitor) are working together to achieve this. Average timeframes would be within a month.
We understand that you may often need funds urgently at short notice. Be assured that our experts will work diligently to the fastest timescales possible to complete your deal.
What happens if I pay back an exit loan early?
Paying back a development exit loan early, whether in part or in full, would mean paying back less interest in the long term. As they are subject to monthly interest which is only due for the period that funds are drawn. Unlike with other loans, paying a development exit loan off early will not incur any early repayment charges like you would see on a traditional mortgage.