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Comprehensive Guide to Development Exit Finance

Table of Contents

Understanding Development Exit Finance

What is Development Exit Finance?

Development exit finance is a strategic financial solution designed to support property developers as their projects approach completion. This type of finance falls under the category of bridging loan options, providing a crucial tool for developers to manage their funding and cash flow efficiently. Typically, these loans come with rolled-up interest, ensuring a manageable repayment plan as the project transitions to its final stages.

The Role of Development Exit Finance in Property Development

In the realm of property development funding, development exit finance plays a pivotal role. It serves as a bridge, enabling developers to transition smoothly from construction to the sale or rental phase. This financial product is particularly beneficial for developers nearing project completion but facing delays in sales or refinancing opportunities.

Key Features and Benefits

Maximizing Loan to Value (LTV) Ratios

Our development exit finance options offer LTV ratios up to 80%, ensuring maximum leverage for your project. This high LTV ratio empowers developers to optimize their funding and focus on project completion and sales strategies.

Attractive Interest Rates

Interest rates for these loans start as low as 0.43% per month. The rate is tailored to each project, factoring in the LTV ratio and the robustness of the exit strategy. This competitive pricing model is designed to reduce the financial burden on developers, particularly in the crucial final stages of project development.

Flexible Loan Terms

We offer a range of loan terms from 1 to 36 months, with a maximum of 12 months for regulated loans. This flexibility ensures that developers can choose a term that aligns with their project timelines and sales strategies.

Strategic Planning and Costs

Effective Exit Strategy Planning

Exit strategy planning is a critical component of securing development exit finance. A well-thought-out exit strategy not only enhances the loan approval chances but also ensures a smooth transition to long-term financing solutions such as mortgage refinancing.

Understanding the Costs Involved

While securing development exit finance, developers should be aware of various costs. These include lender arrangement fees, potentially lender exit fees, valuation fees, and legal fees. Our transparent approach ensures that all costs are clearly communicated upfront.

FAQs on Development Exit Finance

Q: How does development exit finance differ from traditional development finance?
A: Development exit finance typically offers lower interest rates and is used as a bridge at the completion stage of a project, whereas traditional development finance covers the construction phase.

Q: Can first-time developers apply for development exit finance?
A: Yes, first-time developers can access development exit finance, subject to certain criteria and the strength of their project and exit strategy.

Q: What are the repayment options for development exit finance?
A: Repayment can be structured with monthly interest payments or rolled-up interest, where the total interest is paid at the end of the term.

Q: How quickly can a development exit finance loan be arranged?
A: Loans can typically be arranged quickly, within 7 to 14 days, ensuring that developers have timely access to funds.

Q: Are there any penalties for early repayment?
A: Development exit loans usually don’t include exit penalties, allowing more flexibility in repayment as per the sales or refinancing timelines.

Author: Stuart Phillips

Author: Stuart Phillips

Fully CeMap qualified, Directly Authorised by the FCA and with over a decade of experience, Stuart has a wealth of experience in both specialist BTL and residential mortgages.

Need help with Re-Bridging and Development Exit?

Here at AALTO Mortgages we have extensive experience with Re-Bridging and Development Exit. Click below for contact options , or call now on 020 7183 1101 to speak with an experienced broker.
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