Developer Exit Finance
What is Developer Exit Finance?
Developer Exit Finance is used by property developers to pay off outstanding loans on a recently complete, or nearly completed project. They are a type of bridging loan often used to increase cashflow, to enable them to finish off properties, purchase new sites and also exist onto better rates.
This type of finance solution is typically provided by specialist bridging lenders, however a number of banks also now offer lending in this space.
Why do developers use these facilities?
- Compared to other forms of property finance they are quick and simple to put in place.
- The development has been delayed and the development loan needs to be repaid.
- To release tied up equity; providing funds for cash flow.
- To refinance of a joint venture partner.
- To complete unfinished property (when the existing lender won’t lend any more funds).
What sort of options are available?
- Loans start from £50,000 to typically £50,000,000
- Lenders can finance up to 80% of the value typically a maximum of 75% of the property on competitive rates with no exit fees.
- For large schemes, with units sold or under offer, lenders can agree to release some of the sales proceeds on each partial loan repayment, giving cash release on each sale.
- Part completed schemes are considered, funding the remaining works, then offering a generous period to sell the property / properties.
Top Tips for Developer Exits
Work with experienced brokers who will stay with you throughout the journey of the loan. We help our clients find a way forward, even when they find themselves in difficult scenarios.
Research the value of the units to give some accuracy to the lenders.
Work with proven lenders in the space and understand how the lender is funded and how this could impact your loan.
Some bridging lenders don’t lend off the true market value of a property and instead use the 180 day value or 90 day value, make sure you know what value the lender lends against.
Read the small print. There can be some hefty penalties for going beyond the loan term so make sure you fully understand the terms that are on offer.
It’s not all about the rate. The banks typically offer the best rates however their service compared to some of the specialist lenders is often slower requiring a lot more information.