A Client Has an Expiring Development Facility: Why Early Refinancing Matters

The Client Situation

A property company has converted a Birmingham building into 18 self-contained apartments. Planning permission is in place and the building work is complete. Each unit has separate meters, an EPC and its own council-tax assessment. The block is expected to generate approximately £15,000 per month and has an end value approaching £2 million.

The development facility, however, is nearing maturity. The client intends to retain the building, so sales cannot provide the planned exit. A commercial investment lender must value a recently converted multi-unit freehold block, accept the company and property structure, underwrite the new rental stream and complete legal work before the original lender’s deadline.

For the accountant, the asset may look operational and the development profit may appear substantially earned. For the lender, the exit remains conditional until every requirement is satisfied and funds complete.

Why Early Refinancing Matters

Starting early protects options. A term refinance can involve initial assessment, valuation, credit approval, offer, tenancy or occupational evidence, searches, title review, redemption figures and completion. A portfolio or mixed-use property may need additional specialists and more detailed legal analysis.

A late start turns ordinary questions into deadline risks:

• a valuation lower than the appraisal leaves a repayment shortfall;
• the completed property falls outside the chosen lender’s policy;
• tenancies, licences, warranties or title documents are incomplete;
• the borrower’s accounts or ownership require explanation;
• the lender needs every unit occupied before drawdown;
• a local-authority search or legal requisition takes longer than expected;
• the existing lender’s redemption figure increases;
• sales exchange but fail to complete before maturity; or
• the first proposed lender declines, leaving no time for a second route.

Speed can still be achieved in a prepared case. Willow’s published £5 million London developer refinance completed in ten working days, but that outcome depended on front-loaded documentation, coordinated stakeholders and a coherent portfolio presentation—not urgency alone.

An Early-Warning Timeline for Accountants

These are planning prompts, not guaranteed lender timescales. Complexity can require longer. The useful control is a maturity register that records each short-term facility, notice date, contractual maturity, expected balance, planned exit, current evidence and owner of the next action.

Compare the Available Exit Routes

Development-exit finance can create a controlled marketing or stabilisation period, but it is still short-term debt. It should not replace one expiring facility with another unless the second loan has a realistic, evidenced repayment route.

What “Complete” Must Mean to the New Lender

Different lenders can use different thresholds. Practical completion may need to be evidenced by an architect or contract administrator. Building-control sign-off, new-build warranty, planning-condition discharge, fire and safety evidence, EPCs, licences, lease or title creation and utilities may all affect whether the asset is acceptable.

If the exit is a term investment loan, the lender may also require tenancy agreements, deposits, rent schedules and a specified level of occupancy. For commercial or mixed-use space, lease terms, tenant covenant and vacant units can change valuation and debt service.

The accountant should not certify construction or regulatory compliance. Their role is to ensure the finance model does not treat income, value or refinance proceeds as available before the conditions supporting them are actually met.

Model the Redemption, Not Merely the New Loan

A new facility of £1.2 million does not produce £1.2 million for the client. The funds may need to repay the existing loan, accrued or default interest, exit fees, new-lender arrangement costs, valuation, legal costs, broker fees and other secured liabilities.

The model should also show rent, voids, service costs, corporation tax and VAT liabilities, future capital expenditure and interest cover. If the client wants extra capital for another project, compare taking it within the initial refinance with a later further advance—but do not weaken the primary redemption or ongoing affordability.

Stress-test at least:

• completed value 10% below appraisal;
• rent below forecast or slower occupancy;
• higher refinance interest rate;
• one to three months of delay;
• additional completion or compliance cost;
• purchaser fall-through or slower unit sales; and
• the lender offering a lower loan-to-value or requiring partial repayment.

What the Accountant May Need to Provide

Property documents come from the wider team: planning, completion certification, warranties, leases, licences, EPCs, valuation and title. A single indexed data room helps broker, lender, valuer and solicitor work from the same current evidence.

Worked Example: Refinancing an 18-Unit Development Before Default

Willow’s client had converted a Birmingham freehold building into 18 self-contained apartments. The existing bridge was close to expiry, creating a time-sensitive need for long-term finance. The new security was a recently completed multi-unit freehold block rather than a standard single buy-to-let property.

The lender needed confidence in planning, completion, individual unit evidence, rent and value. The client’s projected monthly rent was approximately £15,000, but each unit needed to be fully tenanted before drawdown. That made the letting programme part of the completion critical path.

Willow identified commercial investment lenders able to assess the block and modelled a conservative valuation. The client considered borrowing only enough to repay the bridge or taking a fuller facility that also supported future growth. Analysis indicated that arranging the additional capacity in the original refinance was more cost effective than returning later for a higher-priced further advance and another valuation.

A five-year fixed, interest-only commercial investment facility completed in time to repay the bridge before default. The structure stabilised monthly cash flow and retained capacity for the client’s wider strategy.

The lesson is not simply “refinance early.” The exit succeeded because property evidence, tenancy, valuation, loan size, future capital needs and the maturity date were coordinated as one transaction.

Build a Contingency Before It Is Needed

A credible plan B might be an alternative term lender, a development-exit bridge, selective unit sales, an agreed extension, a capital injection or refinancing another asset. Each alternative has its own valuation, legal, tax and timing consequences.

Do not assume the existing lender will extend. Review the facility agreement with the client’s solicitor, obtain an up-to-date redemption statement and communicate early. Where a shortfall is possible, establish its source before the new lender issues an offer.

Willow has also published an example of a £5 million refinance across three mixed-use and development assets held through multiple SPVs. Prior brokers had struggled with the structure, while the facility expiry was only weeks away. A consolidated portfolio presentation and prepared documentation enabled completion within ten working days and avoided default penalties. It demonstrates what preparation can achieve—but should not be treated as a normal minimum timetable.

Where the Professional Boundaries Sit

The accountant maintains the maturity and cash-flow picture, reconciles project costs, provides company information and advises on accounting, tax and VAT consequences. They can identify when assumptions are no longer consistent with actual performance.

Willow advises on development-exit, bridging, investment or portfolio refinance; lender selection; leverage; interest; security; and execution. The solicitor advises on the existing agreement, default position, title, releases and new security. The valuer and relevant construction professionals confirm property value and completion.

The accountant’s best intervention is often a question at a routine meeting: “What repays this facility, what evidence is still outstanding, and how many months remain if the first route fails?”

Common Mistakes to Avoid

• Treating practical completion as the exit: debt remains until redemption.
• Starting after the final unit is finished: refinance work can begin earlier.
• Using GDV as guaranteed refinance value: the new lender commissions its own valuation.
• Counting reserved or exchanged sales as cash: only completion repays debt.
• Assuming every unit can be mortgaged separately: title, lease and lender policy matter.
• Ignoring the redemption balance’s growth: interest and fees can create a shortfall.
• Depending on full occupancy without a letting timetable: operational evidence can delay drawdown.
• Seeking maximum capital before securing redemption: the first objective is a safe exit.
• Relying on an extension: it requires lender agreement.
• Waiting for a decline before preparing plan B: alternatives also need time.

When to Involve Willow

Refer the client when:

• a development, bridge or refurbishment facility has six months or less remaining;
• practical completion or planning conditions are slipping;
• the client intends to retain rather than sell;
• sales have slowed or purchasers have not completed;
• completed value or rent is below appraisal;
• units need leases, licences, warranties or occupancy before refinance;
• the asset is a multi-unit block, mixed-use scheme or unusual property;
• multiple SPVs or intercompany balances complicate the case;
• the refinance must also raise capital;
• a lender has reduced the proposed advance or withdrawn; or
• default interest or extension fees are approaching.

The anonymous initial outline should include facility, current balance, maturity, security, completion status, remaining works, value, rent or sales, ownership, desired exit, evidence outstanding and expected shortfall.

Relevant Willow Case Evidence

For a larger multi-asset example, see how Willow structured a £5 million refinance for a London developer.