Development exit finance is the short-term facility that replaces your senior development loan once you've reached practical completion and the scheme is actively selling. It's cheaper than dev debt because the lender no longer carries construction risk, and structured more flexibly than a term mortgage because the sales pipeline determines the repayment curve.
For most UK developers this means monthly interest in the range of 0.55% to 0.85% per month on regulated deals, or 0.59% to 1.10% per month on non-regulated, with arrangement fees around 1.5% and increasingly rare exit fees. The catch isn't the headline rate — it's the sales period. The longer your units take to clear, the more expensive the product becomes, and there's a crossover point where a term refinance is cheaper. A companion calculator computes that crossover live.
4. Anatomy of a dev exit deal
Every dev exit facility has the same five moving parts:
- The day-one LTV. The lender values the completed scheme — not the GDV forecast — and lends against that. Mainstream is up to 70% LTV, with specialists reaching 75% and a handful stretching to 80% on prime stock.
- The term. Typically 12–18 months, sometimes up to 24. Long terms price higher because the lender is exposed to more of your sales cycle.
- The interest model. Serviced (paid monthly from sales proceeds) is cheaper and increasingly standard. Rolled (accrued to exit) is easier on cash flow but compounds expensively.
- The sales-trigger covenant. A minimum number of unit sales or a minimum aggregate sales value by a given month. Missing it triggers a rate step-up, extension fee, or in extreme cases, default interest.
- The exit route. Either full repayment from final sales or a roll-onto a term mortgage. Most lenders want to see a clear exit commitment from month six onwards.
5. What the all-in cost really is
Headline rate × facility × months is only ever 70–80% of the real number. Add:
- Arrangement fee — 1–2% of facility, drawn at close
- Legal costs — £3–15k on mainstream deals, more on complex title
- Valuation — £2–8k depending on scheme size
- Monitoring (if retained) — £1–3k/month
- Exit fee — 0–1%, rarer than it used to be but still common on non-regulated specialist product
On a typical 12-month £3m facility at 0.70% pm with a 1.5% arrangement fee and no exit fee, the all-in cost is roughly £297k or just under 10% of facility. Over 18 months it rises to around 14%. Those are the numbers you should be comparing against a term refinance — the calculator does the maths live.
Where to go next
- Decision framework: When to switch from senior debt — the signals that say it's time.
- Lender selection: Choosing a dev exit lender — who actually does this product well, and how they decide.
- Term sheet: The covenants that actually matter — what you can safely negotiate and what you can't.