Developer exit bridging finance
Developer exit bridging finance is used to refinance development finance when a project is complete or nearly complete. It may give developers more time to sell units or refinance without the pressure of the original development loan terms.
When developer exit finance is used
Developer exit finance is typically used when a development project is complete or nearing completion but not all units have sold or been refinanced. It provides an interim financing solution to repay the development lender while the developer markets and sells the completed units. The exit bridge may also be used to allow time for refinancing into longer-term mortgages.
Practical completion and snagging
Most lenders want the project to be at practical completion with only minor snagging items remaining. Practical completion means the building is substantially complete and habitable. The lender will typically inspect the development and may require evidence that snagging works are being managed.
Sales pipeline and reservation evidence
The lender will review your sales pipeline, reservation agreements and evidence of genuine enquiries or offers. Strong sales progress and firm reservations improve the lender's confidence in the exit. The lender may also consider the market conditions and likely absorption rate for similar developments.
Current debt and redemption figures
You will need to provide redemption figures from your existing development lender showing the outstanding balance and any exit penalties. The exit bridging loan must cover the redemption figure plus any new costs or contingency. The lender uses this information to ensure the bridge will have sufficient funds to repay the existing debt.
GDV and completed value
GDV (Gross Development Value) is the combined market value of all completed units. The lender uses the GDV to determine the maximum loan amount and assess the LTV. A conservative GDV assessment and evidence of market value help secure more competitive exit finance terms.
Exit by unit sales or term refinance
The primary exit route is typically to sell units as they are reserved or completed. An alternative exit may be refinancing individual units into buy-to-let mortgages or owner-occupied mortgages as buyers arrange their own financing. A backup refinance option can provide additional security for the exit bridge.
FREQUENTLY ASKED
Frequently asked questions
Not always, but lenders usually want the project to be complete or close to completion with clear evidence of remaining works.
Yes, that is a common use. The new bridge repays the development facility and gives more time for sales or refinance.
It can be, but this depends on the lender, LTV, completed value, sales position, term and fees.
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Results are indicative and depend on lender criteria, valuation, security, credit profile, exit route and full underwriting.
Results are indicative and depend on lender criteria, valuation, security, credit profile, exit route and full underwriting. Commercial finance may be unregulated. Some property finance can be regulated depending on borrower, property use and loan purpose.