Development Exit Finance in Tonbridge
Enquire NowAdaptive Money helps property developers find development exit finance to refinance completed or nearly completed development projects.
Development exit finance in Tonbridge can replace an existing development loan, potentially reduce ongoing finance costs and provide additional time to sell completed units or arrange longer-term refinancing. Depending on the facility, developers may also be able to release equity from the completed development for another eligible purpose.
If your development is approaching completion, speak to Adaptive Money about the development exit finance options available.
What is Development Exit Finance?
Development exit finance is short-term property finance designed for developments that are completed or approaching completion.
It is commonly used to repay an existing development finance facility once the construction phase has ended. The new facility can provide additional time for completed properties to be sold without remaining on the original development loan.
Development exit finance may also allow developers to release some of the equity created during the project, subject to the property value, existing borrowing and lender criteria.
The loan is usually repaid through the sale of completed units or refinancing onto suitable longer-term finance.
When can you use Development Exit Finance?
Development exit finance in Tonbridge can be suitable once a project has reached the later stages of development and the requirement for the original development facility has changed. Common situations include:
Completed Developments Awaiting Sale: Developers in Tonbridge can refinance while waiting for completed units to sell.
Nearly Completed Developments: Some lenders may consider projects where a limited amount of work remains before practical completion.
Refinancing Development Finance: An existing development facility can potentially be replaced with a development exit loan once the project reaches the required stage.
Releasing Equity: Developers may be able to release eligible equity from a completed development for another project or business purpose.
Allowing More Time for Sales: Refinancing can provide additional time to market and sell completed units rather than relying on an immediate sale.
Moving to Longer-Term Finance: Development exit finance can provide temporary funding while longer-term finance is being arranged.
The development must meet the individual lender's requirements before an exit facility can be arranged.
What Projects is Development Exit Finance Suitable for?
Development exit finance can be available for different types of completed and nearly completed property developments in Tonbridge. These can include:
Residential Developments: Houses, apartments and other eligible residential schemes approaching or reaching completion.
Commercial Developments: Eligible offices, retail units, industrial properties and other commercial developments in Tonbridge TN9 1.
Mixed-Use Developments: Developments containing a combination of residential and commercial property.
Property Conversions: Completed or nearly completed conversion projects may be eligible for development exit funding.
Refurbishment Projects: Substantial refurbishment projects may qualify once the main development work has been completed.
Eligibility will depend on factors including the completion status, property value, outstanding development finance and proposed exit strategy.
How does Development Exit Finance Work?
Development exit finance replaces an existing development facility with a new short-term loan secured against the completed or nearly completed development. The process will generally include:
Discuss Your Development: We establish the current stage of the project, expected completed value, existing borrowing, amount required and proposed repayment strategy.
Review the Finance Options: Suitable development exit lenders and facilities can be considered based on the development and your requirements.
Property Valuation: The lender will normally require a valuation to establish the current or completed value of the development.
Application and Assessment: The lender assesses the development, existing finance, sales position and proposed exit strategy.
Development Exit Loan Offer: If approved, the lender provides an offer detailing the loan amount, interest rate, term, fees and conditions.
Repay the Existing Facility: On completion, the development exit finance is normally used to repay the existing development loan. Any additional capital agreed as part of the facility can then be released.
Repay the Exit Finance: The loan is usually repaid through property sales or refinancing onto longer-term finance.
Requirements vary between lenders and developments, so the exact process will depend on the project.
How much can you Borrow with Development Exit Finance?
The amount you can borrow with development exit finance in Tonbridge depends on the value of the completed development, existing borrowing and the lender's maximum loan-to-value ratio.
Lenders may consider the Gross Development Value (GDV) or current market value when assessing the facility. They will also look at factors including the remaining work, number of units already sold, outstanding development loan and proposed repayment strategy.
Development exit finance may be available at up to around 70% to 75% LTV in some circumstances, although maximum LTVs vary between lenders and projects.
The facility must normally be sufficient to repay the existing development finance before additional equity can be released.
Can you Release Equity with Development Exit Finance?
Development exit finance in Tonbridge can potentially allow developers to release equity from a completed or nearly completed project.
Equity may have increased during the development because the completed property is worth more than the outstanding development borrowing. Subject to the lender's maximum LTV and other criteria, a new exit facility may therefore provide more than the amount required to repay the existing development loan.
The additional capital could potentially be used towards another development or other eligible purpose.
Whether equity can be released and how much is available will depend on the valuation, outstanding borrowing and lender requirements.
How Long does Development Exit Finance Take?
Development exit finance can often be arranged within around 2 to 3 weeks, although the actual timeframe depends on the lender, valuation, legal work and complexity of the development.
The lender will need information about the project, existing development facility, completion status and proposed exit strategy before making a lending decision.
Projects in Tonbridge with clear documentation and limited outstanding development work may progress more quickly than complex applications.
If your existing development finance has an approaching repayment date, it is sensible to consider the available exit options before the facility expires.
What are the Current Development Exit Finance Rates?
Development exit finance interest rates in Tonbridge can typically range from around 0.5% to 1%+ per month, although the rate available will depend on the lender, development and circumstances of the application.
Lenders consider factors including the loan amount, loan-to-value ratio, completed property value, remaining development work, sales position and proposed exit strategy when determining the rate available.
Additional costs can include:
Arrangement Fees: These can commonly be around 1% to 2% of the loan amount, depending on the lender.
Valuation Fees: A valuation will normally be required to establish the value of the completed or nearly completed development.
Legal Fees: Legal costs usually apply because development exit finance is secured against the property.
Broker Fees: A broker fee may apply depending on the size and complexity of the finance.
Exit Fees: Some lenders charge an exit fee when the development exit facility is repaid.
Frequently Asked Questions
Does a Development Need to be Fully Completed for Exit Finance?
Not always. Some lenders will consider developments that are substantially complete with a limited amount of work remaining. The stage required will depend on the lender, remaining development costs and project.
Can I get Development Exit Finance if Units Have Not Sold?
Yes. One of the main purposes of development exit finance is to provide additional time for completed units to sell. The lender will consider the development value, sales position and proposed repayment strategy.
Can Development Exit Finance Reduce my Interest Costs?
Development finance can become relatively expensive once construction has finished and the full facility has been drawn. Moving onto a suitable development exit facility may reduce the ongoing cost of borrowing, although this will depend on the rates, fees and terms available.
What Documents do I Need for Development Exit Finance?
Requirements vary between lenders, but you may need to provide details of the existing development facility, development appraisal, valuation information, planning documents, completion information, sales details and evidence of your proposed exit strategy.
How is Development Exit Finance Repaid?
Development exit finance is commonly repaid as completed properties are sold. It may also be repaid by refinancing the development onto suitable longer-term finance.
What Happens if the Properties do Not Sell Before the Loan Ends?
You will need another suitable repayment strategy if the properties have not sold before the agreed loan term ends.
Depending on the circumstances, this could involve refinancing, although this is not guaranteed. It is important to consider the expected sales period when arranging the original facility.
Contact Us
If you are looking for development exit finance in Tonbridge, speak to Adaptive Money about your development.
Tell us the current stage of the project, its expected value, how much development finance remains outstanding and your plans for selling or refinancing the completed properties, and we can discuss the options that may be available.
We cover Tonbridge (Kent)