What is a Development Exit Loan, and How to Apply?
Property developers often face a crucial challenge once a project nears completion: how to repay short-term development finance while unlocking funds to move on to the next opportunity. This is where a development exit loan comes in.
In this article, we’ll explain what a development exit loan is, how it works, its key benefits, and how to apply successfully.
What is a Development Exit Loan?
A development exit loan is a type of short-term finance designed to help property developers refinance an existing development loan once a project has reached practical completion.
In simple terms, it replaces the original development finance with a new facility that:
Pays off the initial development loan
Provides breathing space to market or sell the property
Unlocks equity for the developer to start new projects
Development exit loans are typically arranged for 3 to 18 months, depending on the lender and the project’s circumstances.
Why Use a Development Exit Loan?
There are several reasons why property developers choose this form of finance:
1. Reduce Costs 📉
Development finance usually carries higher interest rates. Refinancing into an exit loan often means lower monthly costs.
2. More Time to Sell ⌛
Instead of rushing sales under pressure, a development exit loan gives developers the flexibility to achieve better market value.
3. Release Equity Earlier 💸
Some lenders allow surplus funds to be released, giving developers working capital for their next project.
4. Improve Profitability 💰
With reduced financial pressure, developers can negotiate stronger sales prices and avoid distressed disposals.
Eligibility for a Development Exit Loan
Lenders typically look for:
Completed or nearly completed projects
Valid planning permission and completion certificates
Evidence of market demand or pre-sales (if applicable)
A clear exit strategy (e.g. sales pipeline or refinance to buy-to-let)
How to Apply for a Development Exit Loan
Applying is straightforward if you prepare properly. Here’s a step-by-step outline:
Step 1: Assess Your Needs
Work out how much you need to repay the existing loan and whether you want additional funds released.
Step 2: Gather Documentation
Lenders will usually ask for:
Project details and costs
Valuation report
Planning permissions and completion certificates
Sales pipeline or marketing strategy
Step 3: Approach a Specialist Broker
A development finance broker, like Celtic Finance, can match you with the most suitable lenders and negotiate competitive rates.
Step 4: Receive Indicative Terms
You’ll be provided with terms outlining interest rates, loan-to-value (LTV), fees, and conditions.
Step 5: Complete Legal and Valuation Checks
Once accepted, lenders will carry out due diligence, including legal checks and a valuation.
Step 6: Drawdown and Repay Existing Loan
Funds are released, enabling you to repay your original development finance and continue towards your exit strategy.
How Celtic Finance Can Help
At Celtic Finance, we work with a wide panel of lenders to secure competitive development exit loans tailored to your needs. Whether you’re looking to reduce finance costs, release equity, or buy time to maximise sales value, our team will guide you through the entire process.
📞 Get in touch today to discuss your project and explore your options.
Key Takeaways
A development exit loan helps developers refinance completed projects.
Benefits include reduced costs, more time to sell, and releasing equity whilst waiting to sell or refinance.
Success depends on preparation, documentation, and choosing the right broker.
By partnering with a specialist like Celtic Finance, you can unlock better terms and keep your development projects moving forward with confidence.
