Development exit refinance

Criteria for a finished-scheme bridge

Development exit lenders are most comfortable once a scheme reaches practical completion, because the construction risk that drove the senior development loan has been removed. They want sight of the completion certificate, building control sign-off, warranties and the snagging position, a valuation of the finished asset on GDV, and a credible exit strategy: a realistic sales programme with sensible pricing and absorption across the sales window, or a confirmed refinance onto a BTL term loan or commercial term loan for retained units. On a part-complete development finance case they will also assess the cost to complete, the remaining programme and the contractor before agreeing a drawdown schedule. They underwrite the finished, saleable, financeable asset more heavily than years of trading, so a first-time developer is fundable where the scheme is genuinely complete and the exit is sound. They are stricter on the exit than on the borrower, because a development bridging loan with no real repayment route only moves the problem along. We confirm and document the exit before the facility draws.

How much the exit facility advances and against what

A development finance refinance is sized against the value of the completed scheme on a loan to GDV basis, indicatively up to 70 to 75 percent of gross development value, which is often more than the senior development loan being repaid because the asset is now valued on completion rather than on cost. On a stabilised or part-let basis lenders may also look at loan to value (LTV) in the same band. That headroom can release surplus equity above the senior debt redemption, which a developer can recycle into the next site. Pricing sits below the development finance it replaces, because the construction risk is gone, and is set per month over a term that typically runs 12 to 18 months to cover the sales period. Interest is usually retained or handled through interest roll-up, so the net day-one drawdown is the gross loan less retained interest and fees, and the rising sales receipts are not all consumed by debt service. Where the developer is keeping the units, the BTL or commercial term loan is sized on rental income rather than GDV, so we model both. All bands are illustrative, vary by lender and scheme, are subject to principal sign-off, and are not an offer.

What development exit finance costs and what drives it

The point of a development finance refinance is the saving: moving off a senior loan priced for construction risk onto a finished-scheme bridge usually cuts the monthly cost materially, while removing the maturity pressure that forces a discounted sale. Expect a lender arrangement fee, indicatively around 1 to 2 percent of the loan, a valuation reflecting the GDV and any retained units, legal costs for both sides, and sometimes an exit fee. The largest cost lever is time: a bridge held for three months costs a fraction of one held for eighteen, so a realistic sales plan and a clean exit strategy matter more than chasing the lowest headline rate. Because interest is often rolled rather than serviced, the all-in cost across the expected term matters more than the monthly margin. We disclose our broker fee in writing, quote the all-in cost over the term, and never claim an exclusive panel or a fixed tie to any lender. The figures are indicative and not an offer of finance.

Exit funding against staying on the development loan

Staying on development finance past practical completion is the wrong debt for the job, because it keeps paying for construction risk that no longer exists, which is exactly why refinancing onto a development exit bridge lowers the cost. The choice after that turns on what the developer does with the scheme. Where the units are being sold, a development exit bridge is the right structure: value-led property development bridging finance that holds the scheme through the sales period and is repaid from net sales proceeds. Where the developer is retaining units, the cleaner route is often straight onto a buy-to-let mortgage or a commercial term loan, skipping the bridge entirely, because long-term investment debt is the cheapest money and the income now supports it. A build to rent scheme usually needs the bridge first, through lease-up, then the investment refinance. We map the route so the scheme is on the right debt for what it is about to do, and only arrange a bridge where it genuinely lowers the cost or buys the time the scheme needs.