Development exit finance vs a bridging loan
A development exit bridge and a generic bridging loan are both short-term debt secured by a first charge, but they are sized and structured very differently. This guide draws the line between development exit finance vs bridging, and shows where each one fits.
Development exit finance is a specific, structured use of a bridging loan: it replaces the senior development facility at or near practical completion, is sized on gross development value (GDV) rather than purchase price, and is built around a defined sales or marketing period with a planned exit through unit sales or a refinance. A generic bridging loan is security-led and purpose-agnostic, sized on loan to value against whatever asset is offered, and is not structured around a finished scheme or its sales programme. The development exit bridge is usually cheaper than both the original development loan and a standard bridge because the build risk has gone. We arrange and structure it; we do not lend, and the finance is unregulated commercial lending.
At a glance
- What it isA bridge against a finished scheme
- ReplacesThe senior development facility at practical completion
- Sized onGross development value, indicatively up to 70 to 75 percent
- Typical term12 to 18 months across the sales period
- InterestUsually retained or rolled up
- ExitUnit sales or a refinance onto term or BTL debt
What separates a development exit bridge from a generic bridge
A development exit bridge is a named subtype of bridging finance with a specific job. It is short-term debt secured by a first legal charge against a completed or practically complete residential scheme, taken to repay the senior development loan and to buy time to sell the remaining units. A generic bridging loan is purpose-agnostic short-term debt: it can be raised against almost any property for almost any reason, from a quick purchase to a chain break to a refurbishment, and the lender's main question is the value of the security offered.
The difference is structure, not just label. Development exit finance is sized, termed and priced around a finished scheme and its sales programme. A standard bridge is sized around the security and the borrower's stated exit, whatever that happens to be. Both are unregulated commercial facilities when used by a property developer on an investment scheme. We arrange and structure both; we do not lend.
A finished-scheme bridge does three things a generic bridge is not built to do: it clears the senior development loan as that facility runs to maturity, it is priced lower because the build risk has gone, and it releases trapped equity or profit before every unit has sold. That is why exit funding is treated as its own product rather than a generic security-led bridge.
How a finished-scheme bridge is sized on GDV
The clearest divide in development exit finance vs bridging is how the loan is sized. A development exit bridge is sized against gross development value, the total open-market value of the completed scheme, indicatively up to around 70 to 75 percent of GDV. Because the scheme is finished and snagging is largely done, the valuer can assess real, sellable units rather than a build still in progress, so the lender can advance against that proven value.
A generic bridging loan is sized on loan to value against the security as it stands today, with no concept of a development value to be reached. On a finished scheme the two numbers can look similar, but the reasoning is different: the exit bridge prices the certainty of a completed product and a sales exit, while the standard bridge prices the security and the borrower's general creditworthiness.
| Feature | Development exit bridge | Generic bridging loan |
|---|---|---|
| Sizing basis | Gross development value (GDV) | Loan to value on the security offered |
| Asset state | Completed or practically complete scheme | Any property, any condition |
| Trigger | Practical completion and a maturing development loan | Any short-term funding need |
| Structured around | A defined sales or marketing period | The security and a stated exit |
| Typical exit | Unit sales or a refinance onto term or BTL debt | Sale, refinance or repayment from any source |
| Indicative gearing | Up to about 70 to 75 percent of GDV | Up to about 70 to 75 percent of value |
These figures are illustrative and not an offer of finance. The gearing a lender will actually advance depends on the scheme, the location, the unsold units and the strength of the sales evidence.
Why exit funding is cheaper than the development loan or a standard bridge
Senior development finance is priced for build risk: the lender is funding a scheme that does not yet exist and could overrun on cost or time. Once the scheme reaches practical completion and the PC certificate is issued, that build risk has gone. A development exit bridge is priced for the lower risk of a finished, sellable asset, so it usually carries a lower monthly interest rate than the development facility it replaces, and often a keener rate than a generic security-led bridge because the exit is clearer.
Interest on a development exit bridge is usually retained or rolled up rather than serviced monthly, which protects developer cash flow while units are still selling. Rolled-up interest is added to the loan and settled at exit; retained interest is held back from the advance as a reserve. Either way the developer is not funding monthly payments out of pocket during the sales period. The release of equity above the development loan can then be recycled into the next scheme.
On a finished residential scheme with a GDV of 5 million pounds, a development exit bridge sized at around 70 percent of GDV could release roughly 3.5 million pounds, repay a senior development loan of, say, 3 million pounds, and free the balance as a cash release. The rate would typically sit below the original development facility because the build risk has gone. These numbers are illustrative only and not an offer of finance.
When sales-period funding replaces the senior development loan
Practical completion is the entry point. A development exit bridge is designed to come in at or near practical completion, once the scheme is built and the PC certificate confirms it, and to repay the senior development loan as that facility approaches its term. A developer cannot usually take exit funding on a scheme that is still mid-build, because the product is defined by the finished asset and its sales evidence. A generic bridge has no such gate; it can fund part-built work, but it is then pricing construction risk like any development lender.
The term is set to cover the sales or marketing period, typically 12 to 18 months, and sometimes across the wider 6 to 24 month range that short-term lending spans. That window gives the developer time to sell the unsold units in an orderly way rather than discounting to hit a hard development loan maturity. Deferred sales and a slower market are exactly the conditions exit funding is built for.
- Practical completion reached and the PC certificate issued
- A senior development facility approaching or at the end of its term
- Unsold or part-sold units that need a marketing period to clear
- A wish to release equity or profit before the final unit sells
- A planned exit through unit sales or a refinance onto term or buy-to-let debt
How we structure development completion finance
We start from the exit, not the security. We look at the GDV, the unsold units, the realistic sales period and the planned take-out, then place the facility with the lender whose appetite for a finished residential scheme fits the case. Where the priority is simply to leave a maturing development loan and sell down, we structure a development exit bridge on a first legal charge. Where the borrower needs only a top-up behind a cheap existing facility, a different structure may fit, and we say so.
We work with development-led and short-term lenders across the market, and the right home for a scheme depends on the asset and the numbers rather than any single name. We are an arranger and introducer, not a lender, and DevExit is not authorised by the Financial Conduct Authority because the lending we arrange is unregulated commercial debt. Every figure we quote is indicative and not an offer of finance.
Development exit finance vs a bridging loan: common questions
What is the difference between development exit finance and a standard bridging loan?
Development exit finance is a specific, structured use of bridging: it replaces the senior development loan at or near practical completion, is sized on gross development value, and is built around a defined sales period with a planned exit through unit sales or a refinance. A standard bridging loan is purpose-agnostic and security-led, sized on loan to value against whatever asset is offered, with no requirement for a finished scheme or a sales programme.
Can I just use a regular bridging loan instead of development exit finance on a finished scheme?
You can, because a generic bridge can be secured against a completed scheme, but it is rarely the better choice. A development exit bridge is structured for a finished scheme, sized on GDV, and usually priced lower because the build risk has gone, so it tends to release more and cost less than a generic security-led bridge on the same asset.
Is development exit finance sized on GDV or on loan-to-value, and how much can I borrow?
It is sized on gross development value, the open-market value of the completed scheme, indicatively up to around 70 to 75 percent of GDV. A generic bridging loan, by contrast, is sized on loan to value against the security as it stands. The actual advance depends on the scheme, the unsold units and the sales evidence, and any figure we quote is illustrative and not an offer of finance.
Do I need practical completion before I can take development exit finance?
In almost all cases, yes. A development exit bridge is defined by a finished asset, so it comes in at or near practical completion, once the scheme is built and the PC certificate is issued, and repays the senior development loan. A scheme still mid-build would normally need development finance or a bridge that prices construction risk.
Is development exit finance cheaper than my existing development loan or a generic bridge?
Usually it is cheaper than the development loan, because the build risk has gone once the scheme completes, and it often carries a keener rate than a generic security-led bridge because the sales exit is clearer. Interest is typically retained or rolled up to protect cash flow during the sales period. Pricing depends on the scheme, and all figures we quote are indicative and not an offer of finance.
How long can development exit finance run while I sell the remaining units?
The term is set to cover the sales or marketing period, typically 12 to 18 months and sometimes across the wider 6 to 24 month range that short-term lending spans. That window lets you sell the unsold units in an orderly way rather than discounting to meet a hard development loan maturity, with the exit through unit sales or a refinance onto term or buy-to-let debt.
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.