The final stage of a development is often the most stressful – the sales period. Your units are built (or nearing completion), but your development loan is reaching its expiry date. Pressure from the lender to settle the debt can force you to discount prices for quick sales, eroding your hard-earned profit.
Silver Oak Capital specialises in these situations by securing our clients with a specialised bridging loan that pays off your existing construction lender. This buys you time to sell your units at their full market value and can even release equity early to fund your next project.
This is a short-term bridging loan secured against a completed (or practically completed) development. It is cheaper than construction finance because the risk has reduced – the building is built, and the construction risk is gone. The loan redeems the original development finance facility. It gives you an extended 12 to 18-month period to market and sell the properties. As each unit is sold, a portion of the loan is repaid.
If your development loan is expiring in 3 months and you haven’t sold the units, you face hefty default interest penalties (often doubling your rate). A Development Exit loan refinances the debt before you hit this cliff edge, moving you onto a lower rate and removing the pressure.
You may have finished the build, and you have £500k of profit tied up in the site waiting for the units to sell. Instead of waiting for every single flat to complete, a development exit loan can release the equity you need. It pays off the existing lender and releases a lump sum of your profit immediately, allowing you to go and buy your next site while the sales agent handles the old one.
Because the building is finished, rates are lower than development finance. This instantly improves the project’s profitability by reducing the monthly interest bill.
Lenders will typically lend up to 75% of the completed value. If the original development loan was only 65% of the value, the difference can be released as cash.
You don’t need to service the loan monthly. The interest is retained for the loan term. However, the unique feature of exit loans is that if you sell the units quickly (e.g., in 6 months), you get a refund of the unused interest for the remaining months.
You don’t always need to be 100% finished. Many lenders will advance the loan once the property is “Wind and Watertight” or at “Practical Completion” (PC), providing funds to finish the final snags and landscaping.
We monitor your development loan expiry. We aim to have the exit finance offer on the table 3 months before your current loan expires. This avoids the panic of last-minute refinancing and ensures you never pay penalty rates.
Our clients often use this product to chain projects together. We calculate the maximum LTV available on your completed site to pull out the largest possible cash lump sum. This effectively monetises your profit before the sales complete, funding the deposit for your next acquisition.
Unlike standard development loans which usually require vacant possession for sale, some lenders allow you to rent the units out (to generate income) while you market them for sale. We source lenders with this specific flexibility if your strategy changes from “Sell” to “Hold.”
Yes, provided you are near the end. If the property is sealed (wind and watertight) and only requires internal fit-out, many lenders will provide a “Finish and Exit” product. They will hold back a small retention to cover the remaining works and release it once you reach Practical Completion.
Fast. Because the building is already there, the valuation is straightforward. We can typically arrange a development exit loan in 2 to 4 weeks – much faster than the original development loan took to set up.