Development Exit Finance – Expert Guide and Insights

ABOUT DEVELOPMENT EXIT FINANCE

FAQ'S ABOUT DEVELOPMENT EXIT FINANCE

 

What is Development Exit Finance?

 

Development exit finance is a short-term loan designed for property developers who have completed or nearly completed a project and want to refinance their existing property development finance facility. Instead of waiting for all sales to complete, developers can switch onto exit bridging to reduce costs, free up capital, or release equity.

 

It’s commonly used when a scheme is finished but sales are progressing slower than expected, or where early repayment of the development loan avoids high extension fees. For many developers, it provides breathing space and improves cash flow while marketing the completed units.

Why use Development Exit Finance?

 

The main reason developers use exit finance is cost saving. Development loans are priced higher due to build risk, so switching to an exit facility can reduce monthly interest significantly. It also gives extra time for sales to complete without pressure from an expiring development facility.

 

In addition, exit finance can be used strategically to release equity from a finished scheme, allowing the developer to move onto their next project without waiting for all sales proceeds. For developers managing multiple sites, this ability to recycle cash quickly is often critical to growth.

How does the application process work?

 

The application for exit finance is similar to other forms of bridging loan or development funding but typically faster since the project is already completed. Lenders will require a full valuation confirming practical completion and the open market value of the property. They’ll also want to see details of the sales pipeline, planning approvals, and build warranties.

 

Most applications can be processed in a matter of weeks, especially if legals are well prepared. Having all compliance documents and sales evidence ready for submission is the single biggest factor in avoiding delays.

What loan-to-value (LTV) can I expect?

 

Most lenders offer development exit finance up to around 70–75% of the property’s open market value (OMV), although in strong demand areas or with experienced borrowers, this may stretch higher. Some lenders are more cautious if the scheme is in a slower regional market or sales evidence is limited.

 

Unlike development loans, which are based on GDV, exit finance is usually calculated against current market value since the project is completed. Borrowers with a solid track record and pre-agreed sales contracts often achieve the most competitive leverage.

How fast can development exit finance be arranged?

 

Speed depends on how quickly valuations and legals can be turned around. In straightforward cases with all paperwork in order, funding can complete in as little as two weeks. However, most transactions take 3–6 weeks to progress through due diligence.

 

Developers who maintain up-to-date warranties, insurance, and planning documentation typically move much faster through the process. If a developer knows their existing facility expiry date in advance, starting the exit finance application early can prevent costly last-minute extensions.

What are the typical costs of Development Exit Finance?

 

Costs vary by lender but generally include an arrangement fee (1–2% of the loan), legal and valuation fees, and monthly interest charged between 0.6% and 0.9%. Exit fees may also apply, although many lenders offer products without them. While the interest rate is usually lower than a development loan, the true cost depends on loan size, LTV, and the borrower’s experience.

 

Developers should weigh headline rates against all associated costs, including redemption penalties on their current facility. Careful comparison across multiple lenders is essential to ensure the most cost-effective structure.

Eligibility for Development Exit Finance

 

Development exit finance is available to a wide range of developers and investors, but lender criteria can vary. Most lenders prefer applicants with a proven track record, though it’s possible for first-time developers to secure funding if the project is well-presented and backed by strong professional teams (such as experienced contractors and project managers). Some lenders are open to applications from offshore SPVs, expats, or borrowers with historic credit issues, provided the scheme itself is viable and security is strong.

 

Lenders will typically assess the project’s completion status, valuation evidence, sales pipeline, and the borrower’s overall financial standing. The stronger these elements, the more competitive the terms offered.

REAL-WORLD DEVELOPMENT EXIT FINANCE SCENARIOS

 

Development exit finance is most effective when used strategically — either to reduce holding costs, unlock capital, or provide breathing space during the sales phase. Below are three common real-world scenarios where exit finance plays a critical role.

 

Urban Apartment Scheme – London

A London-based investor completed a multi-unit apartment development but faced slower-than-expected sales. By refinancing onto development exit finance, they replaced a higher-cost development facility with a lower-rate solution, easing cash flow pressure and extending the sales period. This allowed the remaining units to sell without discounting, protecting overall profitability. → Read the full London exit finance case study

 

Luxury Villas – Glasgow

A housebuilder delivering high-end semi-rural villas encountered seasonal demand issues. Development exit finance enabled the project to move beyond its original loan expiry while targeted marketing continued. The additional time resulted in stronger pricing and a complete sell-out during peak buyer demand. → Read the full Glasgow exit finance case study

 

Mixed-Use Development – Birmingham

A mixed-use scheme reached completion but required additional time to secure commercial tenants. Exit finance provided the flexibility to complete final enhancements and improve tenant appeal, ultimately increasing rental income and strengthening exit values. → Read the full Birmingham mixed-use exit finance case study

 

POST-EXIT PATHWAY: WHAT COMES NEXT?

 

Development exit finance is often a transitional step rather than a final destination. Once sales progress or stabilised income is achieved, many developers move onto longer-term funding solutions.

 

Residential units may refinance onto buy-to-let or portfolio facilities, while mixed-use or commercial schemes often transition into commercial mortgages. Planning this pathway early helps avoid unnecessary delays and ensures funding remains aligned with long-term objectives.

 

Some lenders also offer preferential long-term terms for energy-efficient developments, creating additional opportunities to reduce costs once exit finance has served its purpose.

 

For a deeper look at refinancing options after exit finance and how developers structure long-term funding strategies: → Read our guide to post-development exit refinance strategies

DEVELOPMENT EXIT FINANCE TRENDS
(2025 AND BEYOND)

 

Market conditions have made development exit finance an increasingly important tool for developers navigating longer sales cycles and tighter refinancing criteria. Key themes shaping the market include:

 

Longer Sales Periods:

More developers are using exit finance to avoid rushed disposals or costly development loan extensions.

 

Increased Lender Competition:

A growing number of specialist lenders are offering tailored exit facilities, improving choice for experienced borrowers.

 

Valuation-Led Lending:

Strong evidence of demand and achieved sales is increasingly influencing leverage and pricing.

 

Sustainability Considerations:

Energy-efficient schemes may attract preferential terms from some lenders.

 

Regional Differences:

Liquidity and lender appetite continue to vary by location and asset type.

 

For a deeper analysis of lender behaviour, pricing trends, and what developers should expect over the coming years: → Read our full Development Exit Finance Market Outlook (2025–2026)

 

DEVELOPMENT EXIT FINANCE: DON'T LET DEALS FALL APART

 

Sometimes a project is complete but delayed in sale or refinance. Development exit finance bridges the gap, helping you:

 

• Release equity before final sale.

 

• Improve cash flow for your next project.

 

• Avoid extensions on your original development loan.

 

This approach is especially useful in Scotland’s slower or seasonally affected markets.

 

RISKS AND PITFALLS OF DEVELOPMENT EXIT FINANCE

 

While development exit finance can be a powerful tool for reducing costs and unlocking equity, developers should be aware of the potential risks:

 

• Overestimating Valuations – Lenders base borrowing on open market value, not developer expectations. An optimistic valuation can result in lower-than-anticipated funding.

 

• Hidden Costs – Arrangement fees, exit fees, and monitoring surveyor charges can quickly erode the headline rate advantage if not factored in upfront.

 

• Timing Issues – Delays with legals, sales, or warranty documentation can leave developers exposed to extension fees on their current loan.

 

• Overleveraging – Stretching to the maximum LTV may look attractive but can reduce flexibility if market conditions weaken or sales take longer.

 

While these risks are common, most can be mitigated with conservative assumptions, early preparation, and realistic exit planning. Understanding how lenders assess completed schemes — and where deals typically encounter friction — is essential to structuring exit finance effectively.

 

For a deeper breakdown of common exit finance risks and how experienced developers avoid them: → Read our guide to development exit finance risks and pitfalls

HOW TO APPLY: A STEP-BY-STEP-GUIDE

 

Consult with a Development Exit Finance Specialist

 

We can guide you through the intricacies of the process, help you explore the type of loan funds available, and provide personalised guidance.

 

Who Is It For?

 

• Property Developers.

• Landlords & Investors.

 

Application Process

 

• Speak to an expert broker.

• Provide Documentation.

• Financial forecasts.

 

If your application aligns with the criteria, you’ll receive initial terms within 24 hours. The strategy has a lot of moving parts, preparation and professional guidance on an acceptable exit strategy are essential for a successful application.

 

Speak to an Exit Finance Expert

 

Development exit finance is a viable choice for those who want to reduce their costs, extend their marketing period, and release some of their capital. It can help them transform their sales and achieve their goals. However, it is not a one-size-fits-all solution, and it requires careful planning and evaluation. A professional broker or adviser can help find the most competitive rates and terms.