What is finish and exit development finance?
Finish and exit development finance is a loan to allow a developer to refinance and raise additional funds to finish the build of a development site. The typical loan term is 12 months which provides the developer with time to complete and sell the units in the development.
Unlike traditional development exit finance, the finish and exit development finance product will lend on developments that have not yet reached practical completion.
When to use the finish and exit development finance product.
- When the existing development finance facility is about to run out
- If there is a cost overrun which needs to be finance and the existing funder will not extend further lending. (this was quite common during the COVID-19 pandemic)
- The development is not at practical completion and tradition development exit finance is not possible
- To secure cheaper finance compared to the current development finance secured on the site
What is the criteria for the finish and exit development finance?
The typical criteria for the finish and exit loan is:
- Loans from £1m to £100m
- Lending to 75% of Gross Development Value
- Up to 90% of total costs
- Multiple unit development schemes only
- Rates from 6% pa to 11% pa
- Interest rolled up into the gross loan
- Lenders fee 2%
The criteria for the finish and exit product is available from a select number of specialist development finance lenders and their criteria varies. The lender we utilise will depend on the developers’ experience, the loan amount, the type of development and the location.
Finish and exit development funding questions:
Does a development need to be wind and watertight?
Yes, Funding is only available to schemes that are wind and watertight.
Is funding available in Scotland?
Finish and exit development finance is available to developments across the whole of the UK.
Is a personal guarantee required?
In almost all lending situations a PG is required from the shareholders/directors of the Ltd company which owns the site. Lending is also available to LLP’s and pension funds.
Do the completed units need to be sold?
No, the completed units may be refinanced and retained as investment properties. Obviously there will need to be enough equity left in the scheme to repay the development finance lender if you plan to refinance some or all of the completed units on to long term investment finance which is typically at 75%/80% LTV.
Call 0117 989 7950 or email firstname.lastname@example.org to discuss your finish and exit development finance requirements.
We will require the following:
- Details of the scheme including location, planning permission and a copy of the original valuation
- A build schedule including costings and timings
- Confirmation of the GDV from a local agent
- A plausible explanation as to why the funding is required