Development Exit Finance
Development Exit Finance
Raise funds to repay your development finance facility and get the best deal with ABC Finance
Over 30,000 loan-seekers helped
FCA Authorised – Fully regulated
Receive your funds in as little as 5 days
Market-leading interest rates
CeMAP Qualified Advisors
No Broker Fees
Author: Gary Hemming CeMAP CeFA CeRGI CSP
20+ years experience in bridging loans
Key product features
Key Features
Max LTV
Up to 80%
Interest rate
From 0.49%per month
Charge types
1st, 2nd & 3rd considered
Term
1-36 months (maximum 12 months for regulated loans)
Interest type
Added to the loan, deducted or serviced
Completion timescale
5 days – 3 weeks
Criteria
Residential, commercial property or land acceptable
Available to individuals, partnerships, LLPs, Ltd companies, offshore companies, foreign nationals and pension funds
Minimum applicant age 18 years – no maximum age
Available in England, Scotland, Wales and Northern Ireland
Adverse credit accepted (on a case by case basis)
Loans from £25,000 with no maximum loan size
What is development exit finance?
Development exit finance is a type of bridging loan that is used to fund property development projects from the point of practical completion through to sale. It is also known as sales period finance.
While primarily targeted at projects at the point of practical completion (PC), in some cases, we can arrange a development exit loan prior to PC.
How does it work?
It works in much the same way as any bridging loan. The loan is approved based on the property value, loan to value (LTV) and your exit strategy.
Once the loan is arranged, there are usually no monthly repayments to make. Instead, your interest and fees are repaid as your completed properties sell. In most cases, the sale proceeds go to your lender to repay the loan, although it is possible to retain a percentage of each sale.
Where this is required, we can negotiate with the lender on your behalf to agree terms to suit you.
Why would I consider sales period finance?
There are three main reasons why this type of finance is attractive:
1. Firstly, the existing development finance facility is coming to an end and sales won’t be completed in time.
2. Alternatively, where development finance can be expensive, development exit finance can be used to reduce finance costs. This is becoming increasingly popular as rates drop, with our development exit finance rates starting at 0.49% per month.
3. Finally, our products can be used to release capital from a development before sales come through, allowing you to move on to your next project. We can arrange funds very quickly where fast completions are required on new projects.
How long does it take to receive the money?
We can arrange developer exit finance in as little as 5 days, however 3-4 weeks is more realistic in most cases. The key point that determines how quickly you can complete is the need for a valuation report.
As the security property will be newbuild, they won’t pass an automated valuation, meaning a full inspection will be required. Where funds are needed urgently, we can help you to find the perfect lender who can complete quickly as well as working with the surveyor and solicitors to ensure things run smoothly.
How much will it cost?
Options for development exit finance come from our extensive panel of lenders, and our bridging loan rates start at 0.49% per month.
The rate charged depends on a few factors, with loan to value (LTV) being the main driver and the strength of your chosen exit strategy also being very important.
On top of the interest charged, you will be faced with a number of fees when setting up a new loan. The main ones are the following:
Lender arrangement fee – these fees are charged by the lender for setting up the loan and are generally payable on completion. This fee is usually 1-2% of the loan amount and can be added to the loan in most cases.
Broker fees – Some lenders charge a fee for using their service (we don’t). These fees can be as much as 1.5% of the loan amount.
Lender exit fee – Although these fees are becoming less common, some lenders charge an additional fee when the loan is repaid. Where this is the case, it is usually either the cost of 1 month’s interest, or 1% of the loan amount.
Valuation fees – As the properties are new, automated valuations aren’t usually possible, meaning a chartered surveyor must visit the property and produce a report. This fee is usually charged early on in the application process.
Legal fees – You are usually responsible for both your own and the lenders legal expenses in arranging the loan. These fees are usually paid once the formal offer has been issued.
Why should I work with ABC Finance?
At ABC Finance, we’ve been arranging bridging loans since the year 2000 and are experts in our field.
We don’t charge broker fees when arranging bridging loans and have access to lenders across the whole bridging market. This means one thing, we can get you the best deal and secure big savings for you.
When it comes to arranging bridging finance, it’s not as simple as finding the best lender and pointing you in their direction.
We handle the whole application process all the way through to completion and beyond. Should any issues arise post completion, we’ll work with you and the lender to make sure your well looked after.
Frequently Asked Questions
What happens when I start selling the properties?
Unlike development finance, which sees all sale proceeds used to repay the loan amount, development exit lenders are generally happy to allow you to keep a proportion of the sales proceeds.
This allows you to control your cash flow during the sales process and move forward with your next project.
Of course, if you would prefer to repay the loan as quickly as possible, you can use 100% of any sales to reduce the loan balance.
Why should I look to take development exit finance?
There are four main reasons, they are as follows:-
Paying off your current development finance lender on time means you can maintain the relationship with them. If you run over term they may be reluctant to lend on your next project.
You can generally release capital which will allow you to move forward with your next project. This allows you to keep your cash flow moving as fluidly as possible. If you’re running low on funds to complete the build, we may even be able to release capital to help with this.
You will generally be reducing your borrowing costs when taking out exit finance. Where sales could be slow, this can represent significant cost savings, protecting your all-important margin.
Exit finance allows you to choose a much longer sales period than is generally offered by development finance lenders. This takes the pressure off you to look for quick sales and allows you to retain much more control in securing the best possible price for your stock.
Will I get a better deal if my project is completed?
Although there tend to be more options available for projects that have practical completion, we can generally get very low rates as soon as the project is wind and watertight.
There is some variance on this on a project-by-project basis. We’re always happy to talk this through to let you know the rates you’d be eligible for on your scheme both now, and when you reach practical completion.
We can fund up to 85% LTV for some property refurbishment finance projects.
What happens if I repay the loan early?
These loans are usually subject to daily or monthly interest, with the interest only due for the period that the funds are drawn.
This means that you will start saving on interest as soon as you pay off part, or the entire loan.
Exit penalties aren’t usually included in development exit loans.
