Lender choice is crucial for developer exit loans, writes Darrell Walker, head of sales at InterBay Commercial

Short-term finance has become an increasingly popular financing option amongst property developers looking to finance their next project in order to keep their property pipeline moving.

With the relatively flat property market we are currently experiencing some finished projects are understandably taking longer than expected to sell. This means that potential capital is tied up in a completed development still waiting to be fully sold, leaving the developer without funding for their next project. For developers, turnaround is everything. Time is money, and the longer they have to wait before starting a new project, the less revenue they will generate in a year. For the wider housing market, any delay in building houses has knock on implications for increasing overall supply, and helping to support the government’s ambitious housebuilding targets.


Developer exit loans can provide a solution to this issue, allowing developers to access finance on their finished properties before they are sold and pay the interest on the loan once the property has been purchased. These loans can also be appropriate for clients who are at their exposure limit with a current lender as they can approach another lender to repay an existing loan which can then enable new development finance to be agreed. The developer can then start work on their next project quickly, therefore maximising their time and moving onto a new pipeline and ultimately new revenue.

At InterBay, the developer exit product we offer provides an alternative to the typically more expensive options of extending existing development finance or using a bridging loan, and can include an interest roll-up facility, which gives the client time to sell the property, rather than impacting upon cash flow.

However, developer exit cases can be particularly complex and therefore daunting for brokers who are unsure as to which lender will be supportive. Not all are. The cases tend to be high value loans at short notice involving portfolios consisting of a large number of properties needing to be surveyed and valued. Frequently, this means the finance option will be bespoke to the broker’s client and underwritten on a case-by-case basis by a specialist lender.

Alongside this, different teams within the lender’s organisation, including legal and completion, will work together to ensure completion dates are met, givent the typically rapid turnaround times required. Not many lenders have the capacity or skillset to undertake such lending, which in turn limits the broker’s choice of where to turn for support.

As a result, many brokers may be hesitant to take on business in this space, unsure of where they can turn to, or unclear on the options they can provide to their client. So in a growing part of the market, education is vitally important as brokers need to understand the range of specialist finance products their clients can access, and most importantly, what details they must gather in order to make a best case to lenders in order to secure a positive outcome.

Short term finance can provide a solution to cash flow issues faced by property developers by offering an alternative exit strategy to enable new development projects to be undertaken. Short term finance is growing in popularity, but it is vital that brokers equip themselves with key product knowledge by engaging with lenders to fully understand the options, so they are able to tap into this sector of the market.

At InterBay, our national team of BDMs are always happy to arrange a visit or call to help brokers find the best tailor made solutions for their client’s particular commercial requirements so please visit for further information.