Development Exit Finance

Development exit finance lets you switch away from expensive development finance to a more cost effective option.

Development exit finance repays your development facility once the build is complete, replacing it with cheaper short-term funding while you sell or refinance. Switched at the right moment, it cuts the cost of a scheme's final months and removes the pressure of a development loan running out of term.

We arrange development exit finance across a panel of 135+ lenders, timed around your build programme rather than bolted on at the end.

Key facts

What it is: a bridging loan in all but name — it repays the development facility and buys time to sell or refinance.
Why switch: development finance is expensive money, and most facilities allow little or no time for the exit. Moving across should save money through the sale or refinance period.
Loan to value: typically around 70%. Where the agreed exit is a sale, lenders may stretch to 75% or slightly beyond; where you plan to refinance onto buy-to-let, expect 65%–70% so the onward mortgage fits.
Interest: almost always retained or rolled up — no monthly payments. Serviced interest exists, but few lenders offer it and affordability must be evidenced.
Speed: two to three weeks is achievable under pressure; four to five weeks is the comfortable norm.
Early repayment: most products carry no penalty, and unused retained interest is refunded when you repay early.

When to switch — and when to start arranging it

The case for switching rests on two questions: how much time is left on your development facility, and whether your lender built in any allowance for the exit. If the agreed exit was always a sale, the development lender may insist you move across once the scheme completes. If the plan was to retain and refinance onto a buy-to-let mortgage, some lenders allow a margin for that — but more often than not there is no spare time at the end, and the saving from switching is substantial.

Timing matters more than most borrowers expect. Raise the exit with your broker early in the build — indicative terms can be obtained well in advance — and treat the three-to-four-month mark before practical completion as the point to formalise terms and open the process properly. The wrong approach is to drive the last nail and ask for an exit the following week: the product completes at bridging speed, but valuations, legals and your own review of terms all need room.

Where a scheme has multiple units, the loan reduces proportionately as you sell. On a four-house site worth £1 million carrying £500,000 of debt — 50% loan to value — selling the first house at £250,000 repays £125,000 of the facility. That structure lets you sell in an orderly way and hold out for full value, rather than discounting to clear a development loan against a deadline.

Who it's for

Any developer with a completed scheme can use development exit finance — that is its sole purpose, and the criteria mirror standard bridging. The property must be finished, and the valuation must support the loan you need: in most cases the exit facility sits close to the original development loan, unless the market has moved materially.

It is not a tool for part-built schemes. If a project has stalled short of completion and needs further funding, the right instruments are mezzanine finance or a capital raise against other assets.

Costs and fees

The cost profile is close to a standard bridging loan. The exit lender will almost certainly be a different institution from your development lender, so allow for:

A new valuation fee. A fresh valuation is required in nearly every case. The rare exception is an exit product from your existing development lender, who may switch the facility without a full revaluation — though even then, expect an inspection to confirm the scheme is finished and meets the expected value.
New legal fees for the new charge.
An arrangement fee to the new lender, plus a broker fee — the same fee categories that apply across buy-to-let and residential transactions.

Pricing should sit comfortably below the development loan it replaces — that saving is the point of the product. Monthly rates start from around 0.5% for stronger cases and rise with leverage: the scheme's use, location, value and the loan to value you need all move the price, particularly where cost overruns have pushed borrowing higher against the end value. Rates move with the market, so we quote against your actual case.

Maximum borrowing is driven by loan to value, not rental income. If the plan is to retain the units, we run buy-to-let rental calculations alongside the exit facility, so you can see that the onward mortgage covers the bridge before you commit.

The process

Timeline review. Early in the build, we map your completion date and intended exit — sale, refinance or a mix.
Indicative terms. We obtain outline terms in advance, so you know the shape of the facility before you need it.
Formalise. Around three to four months from completion, we firm up terms and open the application.
Valuation and legals. The lender values the finished scheme; legal work runs in parallel.
Completion. The exit facility repays the development loan, and you sell or refinance on your own timetable.

The information requirement is the standard package — identification, proof of address, bank statements and a credit report — plus the valuation on the property itself.

Frequently asked questions

How much can I borrow with development exit finance?

Usually around 70% loan to value, with some flexibility. A sale exit can support 75% or slightly more, because the lender is not constrained by what an onward buy-to-let mortgage will refinance. A refinance exit is generally held to 65%–70% so the buy-to-let loan can cover the bridge.

Do I have to make monthly payments?

Almost never. Interest is retained or rolled up, depending on the lender's preference. A small number of lenders allow serviced interest where affordability is demonstrated, but it adds complexity most borrowers avoid.

What happens if I repay the loan early?

Most development exit products are bridging loans without early repayment penalties. Lenders retain six or twelve months' interest upfront depending on the term, and you pay only for what you use — repay early and the unused interest is refunded.

What if my development isn't finished?

Development exit finance is for completed schemes only. If you need to borrow against a part-complete project, the conversation moves to mezzanine finance or capital raising on other assets instead.

Should I use a broker or go directly to a lender?

Some lenders accept direct applications. For anything beyond a standard high-street mortgage, though, a broker sees the whole market — terms, lender appetite and the scope to negotiate — and shapes the facility around your exit rather than one lender's product sheet.

Listen to the episode

Scott West discusses development exit finance in more depth on the Propertyze podcast.

Talk to an adviser

Tell us your completion date, the scheme and your intended exit, and we'll set out the right way to fund the final stretch. Call 020 7126 8574 or request a call back — we aim to reply within one working day.

Your property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it. Development exit finance on investment property is generally not regulated by the Financial Conduct Authority.

To put numbers to your own exit, use our bridging loan calculator — it estimates interest, fees, net advance and LTV.

Development finance · Mezzanine finance · Joint venture finance · First-time developers · Hotel development finance · Development finance (GDV) calculator · Development exit case study

Full transcript — “Development Exit Finance”

Recorded November 2023. A conversation with Scott West of Propertyze, transcribed in full. 14 minutes · approximately 2,457 words.

Read the transcript

Hello and on this episode of the Bridging Finance podcast, we are talking all about development exit finance with Scott West from Propertyze. Thank you for joining us again, Scott. How's it going? Very well, thank you very well, besides the weather being awful, making the most of it. Oh, we are, aren't we? We're recording this episode in November 2023 and it's just rain, rain, rain constantly, isn't it, at the moment? Yeah, it's not nice. No. Okay, well, let's dive straight into these questions that we've got here then. First of all, what is development exit finance and what's the difference between development loans and development exit finance? Quite a mouthful there. Yeah, in essence, development exit finance is what it says on the tin really, I suppose.

It allows you to finish building your project and switch the finance over from the relatively expensive development finance you would have in place to a slightly more cost-effective option for the time being. So that gives you then time to either refinance onto a buy-to-let or to sell it if that's your option. So the dev exit finance is usually a bridging loan, which just enables you to repay the dev finance and then give you time breathing space to figure out the exit strategy from there. Right, okay. Well, really clearly explained to there, so hopefully that makes sense to anybody listening. And actually, I think you've touched on the next question. It follows on what type of loan are development exit loans, but you mentioned a bridging loan there, didn't you?

Yeah, more often than not, you would use a bridging loan. They are termed dev exit products, but for all intents and purposes, they are bridging loans. There are some examples of when you could go straight to a term loan, i.e. a standard buy-to-let loan, but more often than not, you do use the dev exit bridging loan options. Okay, there we go. Now, who can take out development exit finance and can you lend to first-time developers? Absolutely, we can. Anyone can take out development exit finance if you've finished development. That's their sole purpose. First-time developers, absolutely, again, the same thing. Similar kind of criteria to people using bridging loans. The property needs to have been finished, completed, and have a valuation that stacks up with the loan

you need to achieve. So, again, more often than not, your gross development value for the development project and the development loan itself, those two things should still match closely to the original development loan, unless there's been wild market changes. So, your exit should be absolutely fine to achieve. Right, okay, brilliant. So, moving on then, why should I look to take development exit finance? But it's part of the process, I think, isn't it? It is part of the process. It really depends on whether your development lender has, whether you got time left in your original product and whether that lender had already included time for you to achieve your exit. So, if the exit was always going to be sale, it might be that

they ask, they insist that you switch over to development exit. But if you have already agreed that the exit strategy would be that you keep the property and that you switch over to a buy-to-lap mortgage, it might be that they've built a bit of time in there for that. But, yeah, more often than not, you will need to switch to your lender won't have time at the end of the product. And from a cost perspective, the difference can be quite dramatic. So, it's beneficial to switch over, it will save you money, should save you money. Okay, so something to bear in mind there. And with these next two questions, you've kind of covered them already, especially the first part, but I'll read them out. So, when is development

exit finance used? And when should I start looking for development exit finance? Yeah, I mean, we've kind of covered the first half of that when you're right. More often than not, it's probably going to be used in a scenario when you have definitely agreed that a sale will be your exit. So, that's almost always when you should start looking. I would say, speak to your broker fairly early in the process, so at least they know that they're looking for that timeline, what they're looking for. They can always achieve, obtain some fairly indicative terms for you upfront. And then as we get to maybe three or four months from the end of the project being completed, really ramp it up and start to get those terms formalized and start the

process then. Okay, so preparation is key, isn't it? I suppose here. Yeah, you don't want to be chasing your tail at the end of the deal. You don't want to put the last nail in and then turn around to your broker and ask for an exit tomorrow. It doesn't work. You need to give them time. And for your own peace of mind, just enough preparation is easier. Okay, so a good point there. Now, what costs do we need to consider when looking at development exit finance? Very similar to the bridging ones we've covered before. Almost certainly, it will be a different lender, a lot worse, but in most cases it will be. So you will need to pay a new valuation fee, new legal fees, quite likely an arrangement fee to the new lender, and a broker fee to your broker if

that's the strategy you're using. So there are the same fees you would see in all the other parts of your transactions, by to let the presidentials, the same fees go across really. But costs, if you're looking at rates, it should be cheaper than your development loan.

But rates, again, like the bridging loans, can vary from 0.45, 0.5% a month, up to 1.2% a month. It depends on the project, whether it's residential or commercial, location, value, and finally the loan to value as well. If the project costs have overrun and you're now at a very high loan to value, that of course will impact the rate too. Okay. So lots of different factors sort of involved there with the costs. So following on from that, the next question asks, how much can I borrow with development to exit finance? Usually 70% loan to value. But again, there is some flex on that. So if the agreed exit is sale, a lender might give you 75% slightly more, perhaps if the sales end because the exit doesn't need to be contained to a normal buy to let mortgage, for example,

which would be limited to 75%. So if you're going down the sale route, you might get slightly more just because the lender knows they can recoup their costs. If you're going down the refinance option, probably limited 65, 70% of the GDV, sorry, of the final value at this point, simply because when you try to exit onto the buy to let mortgage at that point, there needs to be enough money in there to cover that. Right. Okay. And then how will my maximum loan be calculated? As per bridging loan, it won't be calculated on the rental income. It will be limited just by the loan to value in the property. But there is a consideration to be made if you are retaining the property, that's obviously your buy to let mortgage will fit.

And your broker should be able to give you some rental calculations to show you maximum borrowings for buy to let and then you can check the balances on those versus the development exit. Okay. And people would also like to know then, do I have to make monthly payments?

No, it'll be retained or rolled up depending on your bridging lenders preference.

So the interest will be kind of retained within that loan. There are some options where you can service, but you need to demonstrate affordability for those that can be quite messy. There's only a few lenders I know that will do that. So almost always just retained. Okay. And of course, we've already sort of said that preparation is key. And the next question asks, what information would I have to provide for development exit finance? It's the standard package really. It's your ID, proof address, bank statements, credit report. And then for the prompt itself, it's a valuation report on there just to ensure the property is stacking up and needs and meets the requirements for the lender. Right. Okay. And then will a valuation be required?

Yeah, absolutely. The only exception to that might be if the development exit finance is being done by the same company that did the development finance in the first place, they may allow the product to switch over immediately without a valuation in the middle. But the likelihood is they would still send out someone to check the property is finished and meets their kind of expected valuation. Okay. There we go. So something to note. And following on from that, how will my project be valued if it's part complete? That's a difficult one because you wouldn't really be using or looking to use development exit finance if the development's not finished. So in the event that you need to borrow more money but the property isn't finished, we would look at using something like mezzanine finance

or capital raising on other assets, but the development exit product wouldn't be suitable for that. So they wouldn't achieve valuation for that. It just wouldn't fit the product. Okay. So that makes sense there. What happens when I start selling the properties or the property? So this applies to people who are building more than one on a particular site. And the short answer is that as you start to remove properties from the site, so as an example, they say you've built four houses on a plot. When you build the first one and sell the first one,

the proportion amount of the debt is repaid. So let's crudely say that the houses, all four houses are worth a million pounds and you've got 500,000 pence of debt on them. They're 50% loans of value. So you sell the first house for 250,000 pounds and you pay up 125,000 pounds of the debt. So you proportionately pay down the debt as you sell the assets is the most common way of doing it. Okay. Now we've got a question here that asks how long does it take to complete? But I might add in because further down we've got a question that asks how long does it take to arrange a development exit loan? So I suppose how long does it take to arrange and then how long does it take to complete? Yeah, those two are largely the same question, I guess. Similar to

a bridging loan process, they can be achieved as quickly as two or three weeks. If we really put a rush on it, more often than not, I will say to people take a four or five week kind of view that allows comfortable timings for valuations and legals and for your own kind of review of documents and terms really, I suppose. Okay. So some good pointers there. Now we're getting through these questions. So the next one asks what happens if I repay the development exit loan early? Most of them don't have penalties because they are bridging loans, they don't have any penalties. So if you pay it back early, you'll get a, the simplest way of saying it is a refund on the interest you haven't used because the lend is retained six months, 12 months, whatever it might be and up front.

You already pay for what you use. So if you repay early, your gross loan you pay back should be smaller than you took out in the first place, but there shouldn't be any penalties for most lenders. Okay. So that's good news there. And with this next question, I suppose it's a summary of what you've already said throughout the episode. What are the advantages and disadvantages of development exit finance? The advantages are that it gives you, it gives you time to resolve your extra strategies. So if that's the sale or whether that's the refinance onto buy to that more, which is it gives you that breathing space. It should be cheaper with the bridging loan. So with the development exit as well, if your sale is your

preferred option, your development loan probably doesn't have a great deal of time left on it. And the sale of multiple assets might take you six, seven months. So you don't want to be sat on the development loan paying quite high interest rates. We'll be able to switch over to bridging loan, give us off the breathing space to sell them as you need to and achieve the maximum value for them as well. So that's the best part. The downside is that obviously it is another refinance in the middle. So if you're going from, if you plan to retain the properties and you're going from development to buy to let, and this product sits in the middle, it isn't an extra valuation is extra fees to pay in the middle. So it can, it can seem like a costly step,

but most of the time it's a necessary one. And it will ultimately make things easier. Okay. So it's always good to know the pros and cons, isn't it there? And now just lastly, then how can I apply for development exit finance? Should I use a broker or co-directly to a lender? I have a slight bias. I would probably say always use a broker for anything that isn't a standard high street mortgage. This is where I tend to sit with that one. You can apply for them directly. There are some lenders who will let you do that, but a broker will have a wider view of what's been offered, the terms, the appetite. And if the broker has good relationships, be able to negotiate different terms or just make the product more suitable for you. So a broker will always

benefit you when it comes to these sorts of complex transactions. Okay. There we go. Well, thank you for that Scott. Hopefully we've helped a few people out on the episode and I'm sure we'll speak to you again on the podcast soon. Absolutely. Thank you very much.

This is a transcript of a spoken conversation recorded in November 2023, published as recorded and lightly corrected for names and technical terms only. It is general information about how this type of lending works, not advice on your circumstances. This recording is more than eighteen months old. Any rates, fees, loan-to-values or criteria mentioned reflect the market as it stood when this was recorded and are not current pricing and not an offer of finance — for today’s figures, speak to an adviser.

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