Developer Exit Bridging Loan to Allow More Time for Property Sales

Selling newly built homes can take time, even when buyer interest is strong. Rather than accepting lower offers to meet a development finance deadline, developers can use developer exit bridging finance to create additional breathing space.

In this case study, Positive Commercial Finance arranged a Developer Exit Bridging Loan, enabling an experienced developer to refinance an expiring development facility and market completed homes without unnecessary pressure.

The Opportunity

Our client had successfully completed a development of 12 new-build houses in the North West.

Interest from prospective buyers had been strong throughout the construction phase. However, many purchasers were reluctant to commit until the development had reached practical completion.

Once the final works were completed, reservations began to increase. Unfortunately, the original development finance facility was also approaching its maturity date.

The Challenge

The developer needed additional time to complete sales without being forced to reduce asking prices.

The finance solution needed to:

• Repay the existing development loan.
• Provide a 12-month sales period.
• Be secured against the completed development.
• Offer flexibility with no exit fees if sales completed early.

The incoming lender also needed confidence that demand for the properties would convert into completed sales.

Our Solution

After meeting the developer on site, the lender gained a clear understanding of both the project and the local market.

They recognised that buyers were waiting for the finished homes before committing to purchases. As a result, they were comfortable providing a developer exit bridging loan based on the completed property’s open market value.

The new facility refinanced the existing development loan and gave the developer the time needed to sell the remaining properties at market value.

Deal Structure

• Loan to Value (LTV): 75% of Open Market Value
• Interest Rate: 0.69% per month
• Arrangement Fee: 1.5%
• Exit Fees: None

The Result

The bridging loan redeemed the existing development finance facility and provided a further 12 months to complete property sales.

With the immediate refinancing pressure removed, buyers have continued to reserve homes and the developer expects to repay the facility well before the end of the loan term.

This case highlights how a Developer Exit Bridging Loan can help developers protect profitability by allowing sufficient time to achieve the right sale prices.