Development exit finance
Refinance a finished scheme onto cheaper money while it sells or lets.
What development exit finance is
Development exit finance is a facility that repays a development loan once a scheme reaches or nears practical completion, replacing it with cheaper, lower-risk debt while the finished units sell or let. The original development facility is priced for construction risk; once the building is up and that risk has fallen away, the rate is no longer justified, and exit finance moves the developer to a better cost of funds.
It does two things. It cuts the interest cost during the sales or letting period, and it releases equity tied up in the completed scheme so the developer can move on to the next site without waiting for every unit to sell. It is commonly used where a senior development loan is approaching its term but the scheme is not yet fully sold.
- Repays the development loan at or near completion
- Lower rate than construction-stage debt
- Releases equity for the next scheme
- Buys time to sell or let without term pressure
Indicative terms
- Loan size£500k to £50m+
- Loan to valueTypically up to 70 to 75%
- TermUp to 24 months
- RateBelow construction-stage development debt
- ExitSales, letting and refinance, or term debt
Indicative only. Terms vary by lender, scheme and borrower and are not an offer of finance.
Who it suits
- Developers with a completed scheme still selling
- Borrowers near the end of a development loan term
- Developers releasing equity for the next site
Discuss development exit finance
A view on fundability within one working day.
How a completed scheme is refinanced
Completion check
We confirm the scheme is at or near practical completion and that the construction risk has fallen away.
Revaluation
The completed scheme is valued, and the exit facility is sized against that value rather than cost.
Repay the development loan
The exit facility repays the development lender, removing term pressure and cutting the interest rate.
Sell or let, then exit
Units sell or let over the term; the exit facility is repaid from sales, or refinanced onto long-term investment debt.
When a scheme qualifies for exit finance
A scheme usually qualifies at or shortly before practical completion, once it is wind and watertight and the construction risk has gone. Some lenders will refinance a scheme that is structurally complete with only minor works outstanding. The key tests are the completed value, the strength of the sales or letting market, and a clear plan to repay.
How much equity you can release
Exit finance is sized on the completed value, often up to 70 to 75 percent of value. Where that figure exceeds the development loan being repaid, the surplus is released as equity for the developer's next scheme, turning capital trapped in unsold units into deployable cash.
Why exit finance costs less than development debt
Because the construction risk has gone, exit finance is priced below construction-stage development debt, with a lower rate and modest arrangement fee. The saving over the remaining sales period, plus the equity released, usually outweighs the cost of refinancing.
Exit finance versus extending the development loan
Extending a development loan keeps an expensive, construction-priced facility running past completion and offers no equity release. Development exit finance refinances onto cheaper money sized on the finished value, cuts the rate, and frees trapped equity. For a completed scheme still selling, exit finance is almost always the better option.
Development exit finance: common questions
When can I switch to development exit finance?
Usually at or shortly before practical completion, once the scheme is wind and watertight and the construction risk has fallen away. Some lenders will refinance a scheme that is structurally complete with only minor works outstanding.
How much equity can I release?
Exit finance is sized on the completed value, often up to 70 to 75 percent of value. Where that exceeds the development loan being repaid, the surplus can be released as equity for your next scheme.
Is exit finance cheaper than my development loan?
Yes. With the construction risk gone, exit finance is priced below construction-stage development debt, so it cuts your interest cost over the sales or letting period.
What is the difference between exit finance and stabilisation finance?
Exit finance suits schemes selling unit by unit. Stabilisation finance suits operational assets such as student accommodation or care homes that need time to let up or trade to stabilised income before a term refinance or sale.
Discuss development exit finance
Send us your scheme and we will come back with a view on fundability and likely terms within one working day.