When to use development exit finance

The signals that call for a development exit bridge

A development exit bridge is a tool for a specific moment, not a general-purpose loan. The clearest signal is a finished or nearly finished scheme sitting against a development facility running down to its maturity date while the units are still on the market. The build risk has gone, but the original loan was priced and dated for construction, not for a sales period that can run for months.

When that gap opens, a development exit bridge repays the senior debt, resets the clock, and lowers the monthly interest because the lender is funding a completed asset rather than a construction programme. Knowing when to use development exit finance comes down to spotting this handover from build to sale.

• The development loan matures before enough units sell to clear it
• The sales window is slower than the original appraisal assumed
• The carry on the development facility is eating into the profit
• Equity is trapped in a finished scheme that you need for the next site
• A part-complete scheme needs a calmer facility to reach practical completion
• A lender is applying default pressure that risks forcing a discount

Timing the switch to exit funding before maturity

Timing is the question developers ask most, and the answer is earlier than feels necessary. Exit funding is best arranged as the scheme approaches practical completion, not in the final fortnight before the development loan expires. A new facility needs a RICS valuation, legal work and a drawdown, and that takes weeks, so leaving it to the maturity date removes your negotiating room and hands the original lender the leverage.

The practical completion certificate is the natural trigger. Many lenders will look at a deal shortly before completion and complete the refinance once the certificate is issued. A clear runway means the development facility is repaid on time, default interest never starts, and the asset moves to a cheaper footing while the sales period is still ahead of you.

Cutting the carry with a finished-scheme bridge

A finished-scheme bridge is usually cheaper than the development finance it replaces, and that is the second reason to use it. Development finance is priced for construction risk: staged drawdowns, cost overruns and programme slippage. Once the scheme is complete that risk is gone, so a lender funding the standing asset can charge a lower interest rate, which cuts the monthly carry on a scheme that may not be producing sales receipts yet.

Interest is usually retained or rolled up rather than serviced monthly, which protects developer cash flow while units sell. The figures below are illustrative only and not an offer of finance. The actual rate depends on the asset, the leverage against gross development value, and how far through the sales window the scheme is.

Releasing equity with sales-period funding for the next site

Sales-period funding is sized against gross development value, indicatively up to 70 to 75 percent on a loan-to-GDV basis, and that headroom does more than repay the development loan. Where the finished scheme is worth more than the debt against it, the facility can release equity above the amount needed to clear the senior debt, and that capital becomes the deposit or the working capital for the next site.

This matters because a developer's profit is often locked in completed but unsold stock. Rather than wait for every unit to sell before starting again, sales-period funding lets the developer draw the surplus, keep sales running at sensible prices, and put the next scheme into motion. The leverage available depends on the gross development value confirmed by the RICS valuation.

Finishing a part-complete scheme with the exit facility

Not every scheme that needs exit finance has reached practical completion. A part-complete scheme, where the development loan has run out before the build is finished, calls for finish and exit finance: a facility that funds the remaining works and then carries the asset through the sales period on the same footing. We arrange these as a single structured facility so the developer is not stitching two loans together under time pressure.

This route suits a scheme that stalled because the original facility was undersized or the programme slipped. The funder advances the cost to complete, takes a first charge, and the loan converts into a sales-period facility once the certificate is issued. It is the difference between finishing on your own terms and selling part-built at a discount.

How we arrange and place each case

We arrange development exit finance as an introducer and arranger across a panel of bridging and development lenders, and we place each case with the funder whose appetite fits the scheme, the leverage against gross development value, and the sales timetable. We do not lend and we do not quote our own rates. We structure the facility around the practical completion certificate and the sales period, and we line up the take-out, whether that is unit sales or a refinance onto term or buy-to-let debt.

Speed matters when a development loan is close to maturity, so we work to a clear timetable: a RICS valuation, the legal work, and a single drawdown that repays the senior debt. All figures we discuss are indicative and illustrative only, never an offer of finance. The lending we arrange is unregulated commercial debt, and DevExit is not authorised by the Financial Conduct Authority.