We have access to 100’s of development exit finance lenders from private individuals to corporate banks.
Rates start at 0.14% per month for development exit finance.
Loan To Value (LTV)
The maximum loan to value (LTV) ratio is up to 85%.
Loan terms vary but a maximum term will be 18-60 months with us.
Interest is typically rolled up so no need to service the loan.
You can pay back an existing charge and release equity on day one.
“Madison Carter Finance can be found in top searches in google with 5 star reviews. The fastest loan they’ve transacted, was in 3 working days, and many property developers and entrepreneurs says they are there go to resource.“
Development Exit Finance Explained
#1 What Does Development Exit Finance do?
Property developers use Development Exit Finance for equity release, or simply for exiting a development facility that has finished its life as the scheme has hit practical completion.
In the past, we have also used Second Charge Bridging loans in a product mix to save of costs for property developers.
WARNING: Remember, Net Loan over Gross Loan. The longer you take the loan for, the smaller amount the net loan will be on day one. Why? The interest is typically rolled up and retained. This has an affect on the loan to value ratio.
#2 Why should you use this product?
Most property developers use an exit product for multiple reasons but sometimes it’s not always obvious. Here are a few examples:
- Your scheme has hit practical completion.
- You want to release equity on day one.
- Your senior charge is calling in their debt.
- An exit product could provide cheaper funding than a current development facility. This is because the development has been built and is less risky to lend on.
#3 Who is Development Exit Finance for?
Development Exit Finance is for property developers who have hit practical completion and need to exit from their current facility as outlined above.
- Residential or and commercial property.
- Available to individuals, partnerships, LLPs, Ltd companies, offshore companies, foreign nationals and pension funds.
- Minimum applicant age 18 years – no maximum age
- We only operate in England.
- Adverse credit accepted (on a case by case basis).
- Loans from £1,000,000 with no maximum loan size.
Costs of development exit finance
Interest is charge at a rate, there will be a number of fees when arranging such a facility.
Lender arrangement fee – A fee is charged by the lender for arranging the loan and are generally payable on completion. A fee can be anything 1% – 2% of the facility and can be added to the loan in most cases.
Broker fees – Brokers may charge a fee. These fees can be upo top 2% of the loan amount. This is on a case by case basis for Madison Carter Finance.
Lender exit fee – Some facilities have an additional fee when the loan is repaid. When this is the case, it can be either the cost of 1 month’s interest, or 1% of the loan amount.
Valuation fees – As the property is a new development, an up to date Red Book Valuation on an 180 day sale basis must be executed. This fee is charged before the survey has taken place.
Legal fees – You’re usually responsible for both sides of the leagl work, the lenders legal expenses and yours – when arranging the facility. This fee is paid once the facility has been completed but likely to carry abortive fees if the facility does not complete.
How long does it take to complete the loan?
The length of time it takes to complete a development exit loan can vary depending on a number of factors, such as the size and complexity of the project, the lender’s requirements and the borrower’s creditworthiness. On average, it can take 3 days to 4 weeks to complete a development exit loan, to draw down funds. It can take longer if there are any complications or delays.
It’s best to speak with one of our advisors to get a more accurate estimate of how long it will take to complete the development exit loan for your specific project.
What happens when I start selling the properties?
Unlike development finance, which sees all sale proceeds used to repay the loan amount, development exit lenders are generally happy to allow you to keep a proportion of the sales proceeds.
This allows you to control your cash flow during the sales process and move forward with your next project.
Of course, if you would prefer to repay the loan as quickly as possible, you can use 100% of any sales to reduce the loan balance.
Why should I look to take development exit finance?
Development exit finance, also known as a construction exit loan, is a type of loan that can provide developers and builders with the funds they need to complete a construction project and exit the development stage. There are several reasons why you might consider taking a development exit loan:
- Access to capital: Development exit loans can provide you with the funds you need to finish a project, even if other financing options, such as traditional bank loans, are not available.
- Faster completion: With the necessary funds in hand, a development exit loan can help you complete your project faster, which can increase your return on investment.
- Reduced risk: Development exit loans can help you manage the risk associated with a construction project by providing a steady source of funding and allowing you to focus on completing the project.
- Higher returns: A project completed on time and on budget, can result in a higher return on investment. The rate of interest maybe cheaper than a you are paying for a development facility.
It’s important to keep in mind that development exit finance may have higher interest rates and more strict requirements than traditional bank loans, so it’s crucial to consult with a financial advisor and understand the terms of the loan before taking it.
Can I achieve better terms if my project has hit practical completion?
Lenders may be more willing to provide financing for a completed project because it presents less risk and the lender can see exactly what they are financing. Completed projects are easier to run an analysis evaluated for its value, which can make it easier to determine the loan amount and terms. Terms will be more favorable if the project has already hit practical completion.
If the project has already completed and generating revenue, the lender will be more willing to provide financing because there is a steady stream of income to exit the loan.
However, keep in mind that this may not always be the case, as lender’s criteria and policies may vary, and it’s always best to consult with a financial advisor or lender to understand the terms and conditions of the loan.
It’s also important to have a clear plan for repaying the loan, as well as an understanding of the cash flow and projected income from the project, to ensure that you can make the loan payment(s) on time.
What happens if I repay the loan early?
The Financial Conduct Authority (FCA) may regulate your loan. If the loan is regulated Madison Carter Finance can not execute the application for you. It must be submitted through an FCA regulated intermediary.