Development exit finance
Development exit finance is a short-term bridging loan taken once a development reaches practical completion, to repay the development lender and give the developer time to sell or let the finished units. It is typically unregulated. Because the asset is finished, it can sometimes be priced more keenly than development finance — but it still needs a realistic sales or refinance exit.
Last reviewed: 4 October 2026
BridgingLoans.online is an independent UK introducer operated by PASECOM GROUP LTD (company 17139327, ICO ZC117546). We do not lend and we do not advise. Nothing on this page is a quote, an MCOB illustration or an offer of credit.
Why do developers use exit finance?
Development loans run to a fixed date. If the build finishes but units have not sold — because the market is slow, buyers’ mortgages are taking time, or the developer wants to avoid discounting — extending the development loan can be expensive. An exit bridge, if available, repays that lender and starts a new, usually shorter, term against a completed asset that is easier to value.
Developers also use exit finance to avoid forced sales near the end of a scheme, and sometimes to release equity for the next site if the completed value supports a larger loan than the outstanding development balance.
When can I apply?
Lenders generally want the scheme at or very near practical completion, with building control sign-off and the warranties or certificates that buyers’ mortgage lenders will require. Without those, units are hard to sell with a mortgage, and the exit is weaker. Some lenders will look at schemes shortly before completion with a small amount of work outstanding; criteria vary.
| Item | Why it matters |
|---|---|
| Practical completion certificate | Confirms the build is finished |
| Building control completion | Needed for sales and mortgages |
| Structural warranty or architect’s certificate | Most buyers’ lenders require one |
| Sales evidence | Reservations, exchanges and agent’s pricing support the exit |
| Redemption statement from the development lender | Sets the amount the exit loan must repay |
How are partial sales handled?
Exit facilities are usually structured so that each unit sale pays down the loan. The lender sets a release price for each unit — the amount that must be repaid when it sells — and releases its charge on that unit. As units sell, the balance and the interest fall. Unused retained interest may be rebated as the loan reduces; check the offer.
Worked example: six finished flats
Suppose a six-flat scheme has a completed value of £2,000,000, the development lender is owed £1,200,000, and the developer wants nine months to sell. Using this site’s teaching defaults:
| Line | Amount |
|---|---|
| Completed GDV (valuer’s figure) | £2,000,000 |
| Net funds needed | £1,200,000 |
| Arrangement fee (2% of net, added to the loan) | £24,000 |
| Interest base (net + fee) | £1,224,000 |
| Monthly interest at 0.85% | £10,404 |
| Total interest (9 months, simple retained) | £93,636 |
| Gross facility | £1,317,636 |
| Net LTV | 60.0% |
| Gross LTV | 65.9% |
| Total cost of credit (fee + interest) | £117,636 |
Indicative educational example using this site’s calculator method: fee = net × 2%; interest = (net + fee) × 0.85% × months; gross = net + fee + interest. The 0.85% a month and 2% fee are teaching defaults, not our rates and not a quote. Valuation, legal and broker costs are not included.
The exit loan of £1,317,636 gross sits at 65.9% of GDV. If the flats sell evenly over the term, much of the retained interest may be rebated, but the plan has to work even if sales are slow. On average, each flat would need to repay about £219,606 of the gross balance — release prices are often set higher than an even split, so that the loan reduces faster than the security. Model the term in the calculator.
What costs come with switching to an exit loan?
Expect a new arrangement fee, a valuation of the completed units, legal work for both sides (including releasing the development lender’s charge) and possibly an exit fee on the development loan itself. These costs are part of the comparison with simply extending the development facility. The full fee stack is in bridging loan costs and fees.
- Sales of individual units, the most common route.
- A refinance onto a portfolio buy-to-let or commercial loan if the developer will hold and let the units.
- A mix: sell some, let and refinance the rest.
A hold-and-let refinance is a new underwrite, based on rent and the borrower’s profile. See exit strategies.
How does it compare with extending the development loan?
An extension keeps the existing lender and avoids new legal and valuation costs, but may come with higher pricing or default interest if the term has already expired. An exit loan brings new costs — arrangement fee, valuation, legal work — but may be priced for a finished asset. The comparison is a total-cost question, best done with real figures from both. Related: land bridging, commercial bridging and alternatives.
Is this regulated or unregulated bridging?
Occupancy is the legal dividing line. If you or a close family member live in, or will live in, the property as a home (the usual test is at least 40% of it), the loan is likely to be a regulated mortgage contract, with affordability checks, consumer protections and usually a maximum 12-month term. BridgingLoans.online is an introducer, not an FCA-authorised broker and not a lender: where occupancy is yes, we pass a complete pack to an FCA-regulated broker, who explains the protections that apply. Investment, commercial, vacant buy-to-let, land and many company or SPV files are often unregulated. Either way the figures here are indicative only and this is not advice or a product recommendation. See regulated bridging and unregulated bridging.
Your home or property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.
Indicative estimate only. Not a quote, illustration under MCOB, or offer of credit. BridgingLoans.online is a trading name of PASECOM GROUP LTD (company 17139327, ICO ZC117546), an introducer, not a lender. Email hello@bridgingloans.online.
Last reviewed: 4 October 2026.
FAQs
What LTV is typical on development exit finance?
Completed residential schemes are sometimes discussed up to around 75% of GDV on a gross basis, subject to the outstanding development debt, fees and sales evidence.
Can I hold some units to let?
Some developers refinance later onto a portfolio or commercial loan once units are let. That refinance is a new underwrite based on rent and the borrower.
How quickly can exit finance complete?
If certificates and warranties are ready, unregulated completions can be quicker than a regulated home loan. Timescales still vary and are not guaranteed.
Do I keep paying interest on sold units?
A well-structured facility reduces as each unit sale repays its release price. Unused retained interest may be rebated — check the offer.
Is development exit finance regulated?
Usually not, because it is business lending on a completed scheme for sale or letting. Ask the broker if any unit will be occupied by you or your family.
Next step
Use the calculator for an indicative starting point, then enquire if you want an introduction.