Development exit finance is a short-term loan used to repay a development loan once building work is complete but the units are not yet sold or refinanced. It gives developers time to market properties at the right price rather than selling under pressure, and it can reduce the interest cost compared with a development facility that is nearing its term.
When is exit finance used?
A development loan is priced and structured for the build phase. Once practical completion is reached, the facility typically has a limited period left, and the developer may be selling units slowly, waiting for a refinance onto investment mortgages or dealing with snagging. Exit finance replaces the development loan, often at a lower rate, with funds secured against the completed scheme. Our guide to ground-up development loans explains the funding that comes before this stage.
What lenders require
- Practical completion. Usually evidenced by a building control completion certificate or architect’s certificate, plus warranty cover such as NHBC or equivalent.
- Valuation. An open-market and sometimes 180-day-sale valuation of the completed units.
- Sales evidence. Marketing plans, agent opinions and any reservations or exchanged contracts.
- A clear exit. Either sale of the units or a refinance onto term lending; lenders will want to understand which and the timescale. See our guide to bridging loan exit strategies.
Sale or refinance?
If the plan is to sell, the lender will often release funds against individual units as they complete. If the plan is to keep the units as rentals, the exit could be a portfolio or block buy-to-let mortgage, so it makes sense to check term-lender criteria early. Conversions can bring their own criteria – see our article on Class MA conversion finance.
Cost and risk
Pricing depends on leverage, the quality of the scheme and the exit, and sits against a backdrop of Bank Rate at 3.75% following the September 2026 Bank of England decision. Extension fees, early redemption terms and legal costs should be understood upfront. The main risks are slow sales, valuation shortfalls and a change in refinance appetite, so build contingency into any timetable.
Plan the exit before you finish building
Approach exit lenders several months before practical completion so there is no gap between the end of the development facility and the new loan. Learn more about development funding at Giles Finance, read related guidance in the Bridging & Development Finance Hub, or speak to our team.
Development and bridging finance is typically unregulated lending. Your property may be repossessed if you do not keep up repayments on a loan secured against it.
Giles Finance is a trading style of Giles Finance & Consultancy Services, authorised and regulated by the Financial Conduct Authority (FRN 726857).