Business

Development Exit Finance – What You Need To Know

Designed as a way to assist small to medium sized residential developers and house builders, exit finance helps to avoid costly loan repayments where projects have reached practical completion but not all units have been sold.

It is essentially a low-rate bridging loan that helps the developer ease cash-flow, improve profitability and take advantage of new opportunities.

Loan periods typically run from one month to three years and there is usually no early repayment penalty.

The refinancing of a residential development has a range of benefits. Unexpected delays or difficulties in closing out the sale of remaining units, can put pressure on developers when their original development loan period is coming to an end.

Replacing existing funding arrangements with affordable short-term finance, gives the developer more time to sell remaining units at the right price, rather than having to sell at a discount to pay off a high interest loan.

Flexibility is a key requirement for most businesses and particularly for developers.

Being able to adapt to changing situations is vital, but if you can’t access capital when you need it, your options are limited. Having your money tied up on one project can mean missing out on other potentially lucrative opportunities.

Releasing capital to invest in new developments helps increase turnover and means your money is working for you.

The use of development exit finance should be a part of the business strategy of all small to medium sized house builders.

No developer wants to have funds tied up in unsold properties while paying off high-interest loans and watching competitors snap up prime development sites.

Refinancing unsold housing stock results in reduced costs, increased profits and makes sound business sense.

For more information on property development finance visit https://www.propertyfinanceanddevelopment.co.uk/development-exit-finance/

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