Development exit finance rates explained
Development exit finance is priced lower than the development loan it replaces and higher than a long-term term loan, and the rate moves with leverage, GDV and the strength of the sales evidence. This guide explains how the rate is set and how to read an indicative quote.
Development finance rates on an exit bridge are set against a finished scheme, so they price below development finance because the build risk has gone, and above a standard term loan because the facility is short and the exit is still to come. The rate is quoted as a monthly interest rate, indicatively in the region of a few tenths of a percent a month at sensible leverage, and it moves with loan-to-GDV, the gross development value, the location and saleability of the scheme, and the strength of the sales or refinance evidence. It is shown on an indicative quote or heads of terms alongside an arrangement fee, any exit fee, and the valuation and legal costs, with interest usually rolled up or retained. DevExit arranges and places this finance; we do not lend, and every figure is illustrative and not an offer of finance.
At a glance
- Quoted asA monthly interest rate, plus fees
- Sits belowDevelopment finance
- Sits aboveA standard term loan
- Main rate driversLeverage, GDV and sales evidence
- Typical loan-to-GDVUp to about 70 to 75 percent
- InterestUsually rolled up or retained
How rates are set on a finished-scheme bridge
Development finance rates on an exit bridge are set against a completed or nearly completed building rather than a construction project. The lender is pricing a known, standing asset that it can value today, so the rate reflects how easily the loan can be repaid from unit sales or a refinance rather than the risk that the scheme fails to finish. That is the single biggest reason the rate on a finished-scheme bridge is lower than the development loan it redeems.
Pricing is quoted as a monthly interest rate, because the facility is short. The rate is built up from the lender's cost of funds, which tracks the Bank of England base rate, plus a margin for the asset, the leverage and the strength of the exit. Interest is usually rolled up or retained, meaning it is added to the loan or held back from the advance and settled at redemption, which protects cash flow while the units sell. DevExit places each case with the specialist lender whose appetite fits the scheme; we are an arranger and introducer, not a lender, and the finance is unregulated commercial lending outside the FCA regulated perimeter.
Why a development exit bridge prices below development finance and above a term loan
A development exit bridge sits in the middle of three rate bands. Development finance is the most expensive because it carries build risk, cost-overrun risk and the chance the scheme does not complete. A standard term loan or buy-to-let mortgage is the cheapest because it funds a let, income-producing asset over many years and the lender has time and rent to rely on. Exit funding sits between the two: the build risk has gone, but the scheme is not yet sold or income-producing and the facility runs for only a year or so, so it prices above senior term debt and below development finance.
| Facility | Risk being priced | Indicative rate level |
|---|---|---|
| Development finance | Build, cost overrun, non-completion | Highest of the three |
| Development exit bridge | Short sales period, exit still to come | In the middle |
| Term loan or BTL | Long-term, let, income-producing asset | Lowest of the three |
This is why moving from development finance onto an exit bridge at practical completion usually cuts the monthly cost, and why moving on again from the bridge onto a term loan once the asset is sold or let cuts it further. The figures above are illustrative only and not an offer of finance.
What moves the rate on sales-period funding
Three things move a sales-period funding rate more than anything else: leverage, the gross development value and the sales evidence. Leverage is measured as loan-to-GDV and loan-to-value, and it is also tested against loan-to-cost on some cases. A lower loan-to-GDV gives the lender more headroom under the security, so the rate is keener; pushing toward the ceiling, indicatively up to about 70 to 75 percent loan-to-GDV, increases the risk and the price.
- Leverage: a lower loan-to-GDV and loan-to-value price keener; a higher day-one advance toward the cap prices higher
- Gross development value (GDV): a robust, well-evidenced GDV and net development value support a larger, cheaper facility
- Sales evidence: completed sales, reservations, pre-sales and comparable values lower the rate by proving the exit
- Scheme and location: saleability, build quality and a liquid local market all feed the margin
- Developer track record: an experienced developer prices better than a first-time developer with no completions
- Exit clarity: a credible refinance onto term or BTL debt, or a sales run already under way, reduces the price
Of all the rate drivers, sales evidence is the one a developer controls most directly. A scheme with reservations or completed sales on the early units, and clean comparable values for the rest, gives the lender a proven exit. That evidence is what lets us place the case at the keener end of the range, because the day-one advance is supported by real demand rather than an estimate of value.
How to read an indicative quote and heads of terms
An indicative quote, sometimes issued as heads of terms, sets out the price and the structure of the facility before a full application. The headline is the monthly interest rate, but the true cost is the rate plus the fees, so read the whole quote together. A rate per annum or APR can be quoted for comparison, but exit bridges are run and charged monthly, so the monthly interest rate is the figure that drives the cost.
| Line on the quote | What it means |
|---|---|
| Monthly interest rate | The core cost, charged each month and usually rolled or retained |
| Loan-to-GDV / loan-to-value | The leverage, and the ceiling on the day-one advance |
| Arrangement fee | A percentage of the loan, charged for setting up the facility |
| Exit fee | A charge at redemption, sometimes on the loan and sometimes on GDV |
| Term | The window, indicatively 12 to 18 months, to sell or refinance |
| Rolled-up interest | Interest added to the balance and settled at exit |
Read the arrangement fee and any exit fee alongside the rate, because a low headline rate with a high exit fee can cost more than a slightly higher rate with no exit fee. Check whether the rate is fixed for the term or tracks the Bank of England base rate, and confirm the day one advance, the rolled-up interest reserve and the redemption terms. Whole-of-market finance arrangers and development finance calculators can be useful for a first look, but the binding number is the quote a lender issues against your actual scheme. Every figure we relay is indicative and not an offer of finance.
What counts as a competitive rate on a post-completion bridge
There is no single best development finance rate, because the rate is specific to the leverage, the scheme and the exit. As a guide, a competitive rate on a post-completion bridge sits clearly below what the developer was paying on development finance and above a senior term loan. Whether a quote such as 7 percent a year, or an equivalent monthly rate, is competitive depends entirely on the loan-to-GDV behind it, the strength of the sales evidence and the fees stacked on top, so a rate is only meaningful read against the full structure.
The wider market sets the backdrop. Lender cost of funds moves with the Bank of England base rate, and providers from high-street and challenger banks to specialist development and bridging lenders, alongside the wider broker market, all publish indicative property development finance rates and ranges. We do not quote a fixed rate in advance because the market moves and because the right number depends on the case. We test the scheme across specialist lenders and place it where the price and the leverage fit best.
How we structure and place exit funding
We structure each facility around the real exit, set the loan-to-GDV and the term to match, and present the scheme to lenders with the sales evidence and GDV support that move the rate in the developer's favour. We then place the case with the specialist lender whose appetite suits the asset, its location and the developer's track record, and we read every indicative quote and set of heads of terms line by line so the rate, the arrangement fee and any exit fee are clear before anything is committed. DevExit is a finance arranger and introducer, not a lender; the finance we arrange is unregulated commercial lending, and every figure we quote is illustrative and not an offer of finance. More sits on our pillar finance page at /finance/.
Development exit finance rates explained: common questions
How are development exit finance rates set on a finished or completed scheme?
They are set against a finished, standing asset rather than a construction project, so the rate reflects how easily the loan repays from unit sales or a refinance rather than build risk. It is quoted as a monthly interest rate, built from the lender's cost of funds, which tracks the Bank of England base rate, plus a margin for the leverage, the scheme and the exit. Interest is usually rolled up or retained. Any figure we give is indicative and not an offer of finance.
Why do development exit finance rates sit below development finance but above a standard term loan?
They sit below development finance because the most expensive risk, the build itself, has gone once the scheme reaches practical completion, so the lender funds a known asset. They sit above a standard term loan because the facility is short, runs for roughly 12 to 18 months, and the scheme is not yet sold or income-producing. That puts an exit bridge in the middle of the three rate bands.
What moves development finance rates, and how do leverage, GDV and sales evidence change the rate?
Lower leverage, measured as loan-to-GDV and loan-to-value, prices keener because the lender has more headroom, while pushing toward the cap of about 70 to 75 percent costs more. A robust, well-evidenced gross development value supports a larger, cheaper facility, and sales evidence such as reservations or completed sales lowers the rate by proving the exit. Location, build quality and developer track record feed the margin too.
How do you read an indicative development finance quote or heads of terms?
Read the monthly interest rate, the loan-to-GDV, the arrangement fee, any exit fee, the term and the rolled-up interest together, because the true cost is the rate plus the fees. A low headline rate with a high exit fee can cost more than a slightly higher rate with none. Check whether the rate is fixed or tracks the Bank of England base rate, and confirm the day-one advance and redemption terms. Every figure is indicative and not an offer of finance.
What is a good development finance interest rate, and is something like 7 percent APR competitive?
A good rate on a development exit bridge sits clearly below what the developer paid on development finance and above a senior term loan. Whether 7 percent a year, or its monthly equivalent, is competitive depends on the loan-to-GDV behind it, the sales evidence and the fees stacked on top, so a rate is only meaningful read against the full structure. We test each scheme across specialist lenders and place it where the price and leverage fit best.
What loan-to-GDV and loan-to-value can you borrow on development exit finance?
A development exit facility is sized against gross development value, indicatively up to about 70 to 75 percent loan-to-GDV, which at completion is effectively the same as loan-to-value. Drawing below the ceiling keeps the rate keener; pushing toward the cap to release equity ahead of sales costs more. These figures are illustrative and not an offer of finance, and the exact leverage depends on the scheme and the strength of the exit.
Exiting a completed scheme?
Send us the scheme and the gross development value and we will come back with a view on fundability and likely terms within one working day.