Developer exit loans are an option that brokers may not know enough about to use as their first port of call.
Darrell Walker is head of sales at InterBay Commercial
Property developers are always looking at the options available to them for financing their next project as it is essential they keep their property pipeline moving.
Capital tied up in completed properties that are waiting to be sold may leave a developer without sufficient funding for their next project. In these scenarios, minimising turnaround is key to keeping costs low, so access to alternative funding options can be vital.
Developer exit loans are an option that brokers may not know enough about to use as their first port of call. This short-term financing option allows developers to access finance on their completed properties before they have been sold and then pay interest on the loan once the property has been purchased.
This option could help clients who have reached their exposure limit with their current lender as they can approach a separate lender for new development finance. This allows the property developer to keep their pipeline moving and create new revenue without the added pressures of having to sell below market value within a tight deadline.
The developer exit product we offer at InterBay provides an alternative to a typically more expensive option of extending existing development finance or using a bridging loan. It can also include an interest roll up facility, which gives the client time to sell the property, rather than impacting upon cash flow.
Developer exit cases can be complex and therefore brokers need to be aware of the lenders which will be able to guide and support them through the process as, in all honestly, not all have the capability.
These loans are usually high value at very short notice involving large portfolios where all houses need to be valued and surveyed. They are complex, need quick turnarounds and are bespoke to each client so the lender has to have the capacity and skillset to meet this demand and provide the relevant support.
In the growing market of specialist finance products, there needs to be more education for brokers on what details they need from their client to present the best case with the lender to ensure the most positive outcome. We can offer new outcomes for clients and deliver alternative exit strategies when the mainstream options do not work for the client’s situation.
