What happens if a development loan expires before all units have sold?

If a development loan expires with units unsold, the developer faces three options: negotiate an extension with the existing lender (usually at a cost), refinance onto a development exit bridging facility, or accept discounted offers to force quick sales. Extension terms from development lenders are typically expensive and add pressure rather than removing it. A development exit facility from a specialist lender offers lower monthly costs and a realistic sales timeline without the penalty of forced discounting.

What is the arrangement fee for development exit finance?

Arrangement fees for development exit facilities typically range from 1–2% of the loan amount, depending on the lender, the loan size, and the complexity of the scheme. This fee is usually added to the facility and repaid on exit along with the loan balance and accrued interest. Some lenders also charge an exit fee at redemption; others do not. The Kent case carried a 1.5% arrangement fee with no exit fee and no early repayment charges.

Do development exit bridging loans have early repayment charges?

Many development exit facilities are structured with no early repayment charges, which is important for schemes where units sell progressively. Without ERCs, each sale reduces the loan balance immediately, which reduces the interest accruing on the remaining balance. On a small scheme with three or four units, each individual sale can represent a third or a quarter of the loan, free early repayment materially improves the economics of the facility.

How does a development exit bridging loan compare to an extension from the original lender?

Extensions from development lenders are typically priced to reflect the lender's stronger negotiating position at that stage. Common extension costs include a fee of 1–2% on the outstanding balance, a higher interest margin than the original loan, additional monitoring covenants, and legal costs. A development exit facility from a specialist lender is priced on the completed-scheme risk profile, which is lower than the construction phase, and is often more cost-effective than an extension when modelled over a realistic sales timeline.

What LTV is available on development exit finance for completed units?

Development exit facilities are typically available at up to 70–75% of the open market value or GDV of the completed scheme. The actual LTV depends on the lender, the location, the unit types, and the developer's experience. Higher LTVs may be available where a significant proportion of units are under offer or exchanged, reducing the lender's exposure relative to confirmed sale prices.

How quickly can a development exit facility complete?

For a completed scheme with a current RICS valuation and clean title, a development exit facility can complete in 2–4 weeks from initial enquiry. The key inputs needed quickly are the practical completion certificate, build status documentation, current outstanding loan balance and expiry date, and the sales pipeline. The Kent case completed within the six-week window remaining on the existing development loan, repaying the original lender cleanly on the same day.

Development Exit Finance Kent | Specialist Bridging Brokers

Development Exit 4 min read

Deal snapshot
Location	Kent
Property	Three-unit townhouse development, practical completion achieved
GDV	£1,400,000
Existing loan	£870,000 outstanding, 6 weeks to expiry
Units sold at enquiry	Zero (seasonal winter slowdown)
Loan type	Development exit bridging
Facility	£1,050,000
Arrangement fee	1.5%
Term	12 months
ERCs	None
Units sold (outcome)	All 3, within 8 months
Sale prices achieved	Within 3% of original asking prices
Forced sale discount avoided	Approximately 15%

The situation

A developer in Kent reached practical completion on a three-unit townhouse scheme with a GDV of £1.4 million. Three months of active marketing had produced no sales. The local market had slowed over the winter period, buyers were taking longer to transact, and the developer's development finance facility had £870,000 outstanding with six weeks until expiry.

The options were straightforward but unappealing. Accept the existing lender's extension terms, which would add material cost and still provide limited time. Or price the units aggressively enough to force quick sales, with an estimated discount of around 15% off the original asking prices. On a £1.4 million GDV scheme, 15% represents a significant reduction in the developer's return.

Why a development exit facility made sense

Development exit finance is priced on a completed-scheme risk basis. The build is done. There is no contractor exposure, no programme risk, no cost overrun scenario. The lender holds security over completed, marketable units. That fundamentally different risk profile, compared to funding an active construction site, translates to lower rates than the development loan the facility replaces.

The extension offered by the existing lender was priced on continuation of the original development terms. That pricing did not reflect the reduced risk at practical completion. Switching to a specialist exit lender gave the developer access to lower-cost capital sized for the actual risk remaining.

How we structured it

We assessed the completed scheme, the local market conditions, and the developer's realistic sales timeline. The three townhouses were well located, appropriately specified, and had genuine buyer interest, the issue was timing, not product. We arranged a £1,050,000 development exit bridging facility from a specialist lender with experience in Kent residential schemes.

Term	Detail
Facility size	£1,050,000
Arrangement fee	1.5%
Term	12 months
Monthly rate	Lower than the original development finance rate
ERCs	None, full flexibility to sell and repay at any point
Security	First charge over the three completed townhouses

The absence of early repayment charges was a specific requirement. As units sold, the developer needed to direct proceeds straight to the loan without penalty. On a three-unit scheme, each sale represents a material proportion of the total loan balance, the ability to make capital reductions freely as sales completed was central to how the facility worked in practice.

Speed was also critical. With six weeks until the existing loan expired, we needed the facility to complete in time to repay the development lender before default interest started accruing. The facility completed quickly, repaying the existing lender cleanly within the six-week window.

A winter sales slowdown is not a sign that properties will not sell. It is a sign they will take longer than the development loan allowed for. The exit facility solved the timing problem. It did not change the property or the market. It removed the pressure that would have forced the wrong decision at the wrong time.

The outcome

All three townhouses sold within eight months at prices within 3% of the original asking levels. The estimated 15% forced-sale discount was avoided entirely. The developer repaid the exit facility from the sale proceeds, completed the project at full value, and moved on to the next scheme with the profit margin intact. The 12-month term provided the time the market needed; the no-ERC structure ensured the facility cost reduced progressively as each unit sold.

Rates quoted are indicative and subject to change. Actual rates depend on individual circumstances, security, and lender appetite at the time of application. Your property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

We arrange development exit finance from £250,000 across the UK. No broker fees.

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