Development Exit Bridging: finish line funding, so you sell well not fast
The scheme is built but not sold, and the development loan's clock (and rate) is ticking. Exit bridging refinances the finished scheme cheaper, buying time to sell at full price.
Talk to Ashley about your scheme
Why developers use exit bridges
- Development rates are high, and exit rates are lower once the build risk is gone
- Sales are landing but slower than the loan term
- Release equity from the finished scheme for the next site while units sell
"The maths usually surprises people: dropping from a development rate to an exit rate can save more per month than a 5% price cut would cost across the last two units. Selling slower can literally be cheaper."
Why selling slower can be cheaper
That claim deserves arithmetic rather than assertion. The figures below are illustrative, and deliberately describe a difference in rate rather than what development or exit rates actually are, because both move constantly and depend on the scheme:
| Scenario | What it costs you |
|---|---|
| Two unsold units, £600,000 of debt outstanding | — |
| Exit bridge is 0.35% a month cheaper than the development loan | Saves £2,100 a month |
| Alternative: cut the price 5% on both units to sell now | Costs £30,000, once |
On those numbers the monthly saving buys you roughly fourteen months before the discount would have been the better deal. That's the whole argument for the product: a lower rate turns time from an enemy into something you can afford, and full-price sales usually beat a fire sale by more than the finance costs.
How it's structured
A new facility against the completed units at their sale-ready value repays the development lender in full. Each unit gets a release figure, so as sales complete, that slice of the loan is repaid and the facility runs on. Where the numbers allow, equity comes out up front for the next acquisition, so the finished scheme funds the next site while it sells.
Your questions
What is development exit finance?
A bridge that refinances a finished development at a lower rate than the development loan, buying time to sell the units at full price rather than discounting to beat the loan expiry.
When should I arrange development exit finance?
Two to three months before the development loan expires. Leaving it later burns your negotiating position, with the lender and with your buyers.
Can I release cash for the next project?
Often yes, within the loan to value cap. The equity in unsold stock goes to work instead of sitting still.
What LTV can I get on development exit finance?
Typically up to 70% to 75% of the aggregate value of the finished units, adjusted for how quickly they're realistically selling.
Is development exit finance cheaper than my development loan?
Almost always, because the build risk is gone. The construction is finished, so the lender is pricing a completed asset, not a project. That rate drop is the whole point of the product.
Can I get development exit finance before practical completion?
Sometimes. A number of lenders will engage when the scheme is close to done with only minor works remaining, which is exactly why the conversation should start two to three months out, not the week the loan expires.
My development loan has already expired. Is it too late?
No, but it's harder and it costs more. Once you're in default or on an extension your negotiating position is weaker and fewer lenders will look at it, so the sooner you call the better. We would still rather hear from you late than not at all.
Got a deal like this on your desk?
Tell us the numbers and we'll tell you honestly what's achievable.
Prefer to put it in writing? Email support@bridgingfinancebroker.co.uk