Development Exit Loan

What is a development Exit Loan?

A Development exit loan or developer exit finance is for developers to repay a development facility approaching the end of its term.

What are the benefits of development exit loans?

Extends the marketing period – Due to slow sales or construction overrunning, a developer needs more time to sell a completed scheme.

Reduce rate of interest – Developer exit loan rates start from 0.59% per month, this can represent a significant saving on your current facility.

Capital raise/equity release – Equity can be released from the uplifted value of the completed development to provide cash flow for existing projects, fund new opportunities, or for any other legal purpose.

To be eligible for a development exit loan or sales period funding, your development needs to be at or near practical completion.

Key Features

  • All types of residential, commercial and semi-commercial property.
  • Individuals, Partnerships, Limited companies, SPVs, offshore companies, foreign nationals and expats.
  • £150k to £30m.
  • Max 75% LTV.
  • Interest rates from 0.59% per month.
  • Interest usually rolled or retained.
  • Lender arrangement fees from 1.5 – 2%.
  • No early repayment or exit fees.
  • Term typically 6-18 months.
  • Adverse credit accepted.
  • First legal charge.
  • Supporting security considered.
  • Personal Guarantees and Debenture may be required.

Case study

  • Property: 6 new build homes
  • Combined value: £4.2m.
  • Current debt: £2.2m.
  • Situation: The development has experienced delays and the sales market has slowed. The lender is unwilling to grant an extension of the loan with two months remaining. With default fees and higher interest rates looming, an developer exit bridge was needed to give the developer time to sell the properties.

Solution

  • 60% LTV to clear the current debt with a small day one cash release
  • 2% arrangement fee. No exit fees.
  • 15 month term.
  • 0.68% per month.
  • The developer to retain 20% of each sale when LTV falls below 50%.

Lender requirements to apply for development exit finance:

  • Borrower details.
  • Developer background and experience.
  • Funding requirement.
  • Information about the development.
  • Planning permission details.
  • Confirmation New Build Warranties is in place.
  • Building control sign off.
  • Security offered.
  • Exit strategy.

Quest Commercial Finance is a London specialised bridging loan broker. We work with a panel of bridging lenders and clients in London and throughout the UK offering cost effective terms for our developer clients. Contact us if you would like to learn more about how development exit finance and the options available to you.

Contact us to discuss your borrowing requirements

Call us on 020 8988 1102 

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