Development Exit Bridging - Cheaper Finance to Complete Sales

Development exit finance is short-term bridging that refinances a maturing development finance facility once the scheme is practically complete but units remain unsold. The exit bridge is typically cheaper than the original development finance (0.55-0.75% pm vs 0.85-1.30% pm) because the construction risk has been removed. Exit bridging buys the developer additional time to sell completed units without paying the higher development finance rate or accepting an expensive extension.

Development exit bridging is most cost-effective when (1) your development finance rate is above 1.0% pm, (2) 3+ months of sales remain to complete, and (3) at least 30% of units remain unsold. Below these thresholds, the arrangement and legal cost of the exit bridge may exceed the rate savings. Doulton runs the full comparison at no cost so the decision is made on actual numbers, not assumption.

Up to 70% of completed GDV (the value of the unsold units in their finished state, not the original scheme target GDV), occasionally up to 75% on prime stock with strong sales evidence. The LTV is calculated against the unsold units only - units already sold and removed from the security do not count toward the loan. Typical loan sizes range from £500k to £50m+ on larger residential schemes.

Headline rate savings of 0.30-0.70% pm are typical (e.g. 0.65% pm exit bridge vs 1.10% pm extended development finance). On a £2m facility for 4 months, that translates to £24,000-£56,000 in interest savings. Add in extension fees (often 1-2% of facility size on extension vs 0.5-1% arrangement fee on the exit bridge) and the saving frequently approaches £40,000-£70,000 over a 4-month period. Doulton models the full all-in cost for both options.

Yes - reserved-but-not-completed units are commonly treated by exit lenders as either part of the security (valued on contracted sale price with solicitor confirmation) or as scheduled income reducing the loan balance over the bridge term. Some lenders prefer reserved units to be removed from the security entirely with the reservation deposit released; others happily lend against them. The right structure depends on the developer's cash flow priorities.

Typical arrangement time is 14-21 working days from initial enquiry to drawdown. The constraint is usually the lender's review of the development finance position being refinanced, the practical completion certificate or building regulations sign-off, and the new valuation on the unsold stock. Where the developer is already a known borrower to the exit lender, completion in 10 working days is achievable. We start the process well ahead of development finance term-end to avoid forced timing.

Most exit lenders require either a practical completion certificate (PC) from the project's contract administrator or building regulations sign-off on the completed units. Some lenders accept near-completion (90%+ done) with PC due imminently, particularly where the remaining works are external (landscaping, paving, snagging). Without PC or BCSO, the loan is technically development finance rather than exit bridging, and pricing follows accordingly. We screen lender appetite based on the actual completion status before placing the case.