What is Commercial Bridging Exit Finance?
Commercial Bridging Exit Finance is financing to replace the property development finance which the lender takes a first charge over the property being developed. Funding is normally 70% of the Gross Development Value or a maximum of 80% of the project costs including an interest provision that is held back by the lender. Commercial Bridging Exit Finance is one of the the cheapest and best forms of development finance available on the lending market particularly where the borrower has a good deposit and can inject a good amount of cash on day one towards the land or property purchase.
What is Commercial Bridging Exit Finance?
Developer Exit Finance, sometimes known as Sales Period Loans or Development Exit Finance can help you refinance your current development loan from your existing lender.
What is Development Exit Finance used for?
You are approaching the end of term with the current lender.
Developers do not want to have to sell their units under pressure at potentially reduced sales prices, nor do they want to face extension fees with their existing lender. Both can eliminate hard earned profits at the closing part where profits are due to be realised. A developer exit loan can provide developers the time needed to market and sell the remaining unsold units. With no financing exit fees and interest that accrues daily you can repay the loan as quickly as you wish.
You are unhappy with the current interest rate.
Rates typically range from 0.55% – 0.75% per month with a Developer Exit loan wheres the late fees and extension fees with their development loan can be rather costly. Developers can often save considerably by switching to a developer exit loan when their sites reach or are close to practical completion.
Developers want to release cash to work on other projects.
Platinum Global Bridging Finance can facilitate significant cash releases to provide funds for other new development projects. In some cases, the net sales proceeds from each sale can be shared with the developer, further aiding cash flow as each unit is newly built unit is sold.
Development finance facilities often allow a short time period for sales although in most cases, they do not quite allow long enough as the financing companies like to recoup their funds and lend them out again. Once the “out of the ground” construction risk has passed and works have progressed significantly, it is possible to refinance. This often comes at a lower cost than the original development facility as other lenders are there to provide their capital for the last part of the financing process. These facilities then give you a longer marketing and sales period, to enable you to sell the properties without any time pressures and at the market prices you are more willing to accept. They can afford the developer more control over the closing sales process taking away the stress of worrying about redeeming a Development Finance facility on time.
If works are not yet 100% complete, then further monies can also be made available in arrears, in the same way as a development facility would.
Lenders understand that a well progressed or completed development has less risk over a brand new development.
Interest can be retained or rolled-up and paid on redemption, so there are no monthly payments throughout the course of the loan, nor are there any exit penalties.
There is often no set fee/ costs structure with these loans, so our lenders can work with you to create a bespoke loan that suits your requirements. Lenders can be flexible on fees, terms and the way in which interest is repaid.
Sales Period Finance is available on Residential and Commercial Developments in England, Scotland, Wales and Northern Ireland. Options are available for all types of company structures including SPVs, Offshore companies, UK Limited Companies etc.
If you have finished your development and need more time to sell or refinance the properties?
Or perhaps you are part-way through the works and “almost” finished? You are in the right place so simply complete our contact form and one of our experienced advisers will be in touch.
Some of the Key Features of Development Exit Finance?
- Up to 80 LTV%
- Arrangement Fees from 1% to 2% on developer exit products
- Interest Rates from 0.4% per month
- No exit fees or Early Repayment Charges (ERC’s)
- No Up Front Fees
- Up to 36 months with development exit loans
- Available in England, Scotland, Wales and Northern Ireland
- Facilities for first time developers are available
- Option to retain part of your proceeds from every unit sold
- Adverse Credit cases can be funded
- Fast completions possible with exit finance
- Interest can be rolled up, retained or paid monthly.
What are the Criteria for a Sales Period or Development Exit Loan?
- The development will have to be built in accordance with its own planning permission and building regulations.
- On completion the Development will have a suitable New Build Warranty (NHBC)
- A First legal charge will be required on the development property
- Multi-unit development schemes preferred
What information would I need to provide for Development Exit Finance?
- What Ltd or SPV Company (or name) is the project held in?
- A link to the selling agents Sales Particulars, or brochure.
- Planning permission details.
- If the development is finished and currently holds Practical Completion certificates.
- It the development is not finished, a summary of works outstanding, and costs thereof.
- Details of the New Home Warranties, if applicable.
- Amount of debt against the site currently.
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