Development exit bridge

What lenders assess on a finished-scheme bridge

Bridging lenders are most comfortable once a scheme has reached practical completion, because the construction risk that priced the development finance has been removed, but they will also look at a near-complete scheme where building control sign-off and warranties are days, not months, away. They want sight of the completion certificate, building regulations and structural warranties, a valuation of the finished asset, and a credible exit strategy: a sales period with realistic pricing and absorption for the unsold units, or a refinance route onto term debt. They underwrite the asset and the exit harder than the borrower, so a first-time developer is fundable where the development is genuinely complete and the repayment route is sound. A development exit bridge with no realistic exit simply moves the problem along the calendar, which is why we confirm and document the exit before the facility draws. We package the completion evidence, the sales plan and the refinance route, and place the case with a lender whose appetite fits a part-complete or near-complete development.

How much exit funding you can raise against GDV

Exit funding is sized on the gross development value (GDV) of the finished scheme, indicatively up to 70 to 75 percent on a loan to GDV basis, which is often higher than the development facility being repaid because the asset is now valued on completion rather than on cost. That headroom between the loan and the development lender's balance can release surplus developer cash flow to put into the next residential development. Where some units have already sold, the bridge is sized against the value of the unsold units that remain as security. The interest rate is priced below development finance because the build risk has gone, set as a monthly interest figure, and interest is usually retained or rolled up so the net day-one advance is the gross loan less retained interest and fees. We model the loan against GDV, the equity it releases and the all-in cost across a 12 to 18 month term before approaching lenders. All bands are illustrative, vary by lender and scheme, are subject to principal sign-off, and are not an offer of finance.

What sales-period funding costs against development finance

The point of sales-period funding is the saving: moving off development finance priced for construction risk onto a bridge priced for a finished asset usually cuts the monthly interest materially, while removing the maturity pressure that forces unsold units to be discounted. Expect a lender arrangement fee, indicatively around 1 to 2 percent of the loan, a valuation fee reflecting the GDV, legal costs for both sides, and sometimes an exit fee. The largest cost lever is time, because interest is charged per month: a bridge held for four months costs a fraction of one held for eighteen, so a realistic marketing period and a clean exit matter more than chasing the lowest headline rate. We disclose our broker fee in writing, quote the all-in cost across the expected term rather than the monthly margin alone, and never claim an exclusive panel or an exclusive tie to any lender. The figures are indicative and not an offer of finance.

A near-complete scheme bridge against development finance

A near-complete scheme bridge and development finance fund different stages of the same scheme. Development finance pays for the build and is priced for the risk that the build does not complete, so it is the wrong, dearer debt to hold once the scaffolding comes down and the units are finished. A development exit bridge replaces it at or near practical completion, prices the monthly interest below development finance because the build risk has gone, and gives the residential development a defined sales period to sell the unsold units or refinance before sale. Where the scheme will be held and let rather than sold, the route is often this exit bridge, then a refinance onto a long-term investment or buy-to-let term loan once the income is settled. We assess the exit realistically and only arrange development exit bridging where it genuinely lowers the cost or secures the time the scheme needs.