Since the arrival of Covid and the stop start economy, a number of developers have resorted to using a bridging loan product called developer exit. The concept is simple – having built the plots in the scheme the developer can raise finance against the market value with a view to repay the development funder and provide additional funds for future projects. The loan is redeemed on plot sales so it is by nature a short term loan product – a bridging loan.


  • Reducing finance costs

A lender’s risk on funding a completed property is a lot less than the risk of funding a building project from scratch. Interest rates are directly related to risk so the funding of built plots should attract a lower rate than traditional development finance.

  • Avoids lender pressure and potential penalties

A new loan will typically have a term of 12 to 24 months whereas your current development funding may have a term which has expired or is near the end of its term. You may have started to receive calls from the lender enquiring about repayment.

  • Gives you more time to sell, improving your chances of securing the best prices

If you are behind schedule, maxed out your funding line and have a buyer offering to purchase at a discount – you may be tempted to sacrifice your value to avoid penalties and improve cashflow. Refinancing takes this pressure away and puts the developer back in control, improving the chances of securing better prices for the completed properties.



Having quoted for a number of these funding solutions, I would say that you need to look deeper than just the headline rate. Different lenders do not operate their bridging products in the same way.

The most popular method is to charge the finance interest and costs upfront then rebate any unused interest after the plots have sold and loan redeemed. However other lenders only charge interest on drawn funds and offer multiple draw downs so you minimise your borrowing and as a result your borrowing costs.

In some instances I have had developers offered loans from two lenders with different interest rates and even though the first lender’s rates were lower – the cost of borrowing was higher due to the way the lender executed the loan.




Another bridging loan solution you may want to consider very seriously is buying the purchaser’s house in part exchange. This achieves the following benefits:

  • There is no chain.
  • You have control of your new plot sale and the customers house sale.
  • Developers can buy under market value and profit from flipping the purchaser’s property.
  • You can sell off plan and manage the process so that completion takes place the day the plot is ready which could make the difference between hitting or missing the deadline.


The biggest challenge with offering this service is having the cashflow to buy the customers house in part-ex. This is where Specialist Property Finance comes in. Knowing this issue and understanding our developer clients has enabled us to provide a lending service with innovative lenders specifically for this purpose.

The headline features are as follows:

  • Highest Loan to Value features to minimise cashflow pressure.
  • Additional funding for renovations.
  • Up to 24 month term.

The features are intended to help you buy as many part exchange properties as you need, minimising cashflow pressure and maximising profits by:

  • Helping to maintain sales price on plots sold.
  • Providing plenty of time to renovate and sell at the highest price.
  • Reducing cashflow pressure to enable more return on investment on the part exchange property.

Up to when Covid struck last year, the highest loan to value in the market was typically 75% and since then its reduced but we have access to specialist lenders with higher loan to value parameters for property developers in this situation. Meeting this objective is key because the developer may find it challenging to support part exchange from cashflow.

If you are a developer and need to take control of your situation this could be very useful for you.

At Specialist Property Finance its our role to help and advise the developer navigate through the funding minefield to avoid declines and help the developer obtain the best funding terms and rates to enable them to prosper. All our deal assessments are free and it doesn’t cost anything to find out if you can benefit.