What is Development Exit Finance?

Property development exit finance is a specialised form of short-term lending designed to assist property developers and comes into play when the development project is nearing completion or is complete, but you’re waiting for sales to finalise. This type of finance is used to repay any outstanding property development finance or Build to Rent development finance and prepare the property for sale or refinancing.

The Benefits of Exit Finance

Exit finance offers several advantages for property developers. It provides a lower interest rate compared to standard development loans due to the reduced risk for lenders. Developers can use exit finance to extend their sales period or to invest in their next project, thereby avoiding rushed sales that could diminish profits.

How Does it Work?

Lenders assess the viability of the project, the developer’s track record, and the potential market value of the property upon completion. They will generally require the property as security, along with personal guarantees or other assets from the developer.

Cost and Loan-to-Value Ratio

The cost of exit finance is generally lower than that of standard development finance. The loan-to-value (LTV) ratio is a key determinant in the financing amount, representing the percentage of the property’s value that the lender is willing to finance.

The Exit Strategy

An essential aspect of securing exit finance is the exit strategy. Lenders need to understand how the developer plans to repay the loan, whether through the sale of the property or refinancing.

In conclusion, Property Development Exit Finance is a crucial tool for developers looking to transition smoothly from construction to sale. It offers financial breathing space, reduces costs, and can help maintain cash flow, ultimately contributing to the success of a development project.

Before you Begin the Application Process:

Consult with an Expert Broker: At Evolve Finance we understand how development exit finance works and can guide you through the intricacies of the process, helping you explore all available options.