When arranging development finance, most borrowers naturally concentrate on the front end of the process—securing the facility, structuring the drawdowns, and making sure build costs are covered. But seasoned developers know that the real test comes at the other end of the journey. A project can be designed beautifully, constructed to the highest standard, and even delivered on time, but if the finance cannot be repaid smoothly, everything begins to unravel.
This is where the concept of the exit strategy becomes essential. In today’s market, lenders scrutinise exit planning more closely than ever before. Without a credible route to repayment, the best-laid development plans can fail to get funded. For borrowers, this means that thinking about the endgame is not optional; it is the single most important factor in determining whether the deal succeeds.
A development finance exit is, quite simply, the plan for how the loan will be repaid once the project is complete. Because development facilities are short-term by nature—typically ranging from twelve to thirty-six months—lenders insist on knowing from the outset exactly how their capital will return.
In practice, exits usually take one of two main forms. The first is the sale of the completed units, often the default strategy for residential developers. The second is refinancing onto longer-term debt, such as a buy-to-let or commercial mortgage, which allows the borrower to retain the property for rental yield or long-term investment. In some cases, these approaches are combined. For example, a developer might sell part of the stock to release capital while refinancing the remainder, or use a bridge-to-term facility as a stepping stone before refinancing fully.
Whatever the form, the lender’s primary concern is that the exit is realistic, evidence-based, and capable of being delivered on time.
The property finance environment of 2025 has made exit planning more critical than ever. Over the past eighteen months, the development sector has been shaped by fluctuating build costs, regional variations in demand, and a cautious lending climate. Optimistic assumptions that may have been accepted in years past are now subjected to rigorous challenge.
Gross Development Values (GDV), for example, are being examined more conservatively. Lenders no longer accept developer forecasts at face value but benchmark them against local comparables, discounting if they see signs of over-optimism. Similarly, refinancing has become harder to rely upon, as buy-to-let and commercial lenders now apply stricter stress tests. Developers hoping to exit onto a rental facility must demonstrate yields that comfortably meet affordability criteria.
There is also the broader issue of liquidity. Even well-designed, well-located schemes can take longer to sell in a market where buyers are price-sensitive and mortgage approvals are under tighter conditions. Lenders therefore want reassurance that borrowers are not relying on best-case scenarios but have a fallback in case sales slow or refinance criteria shift before completion.
When a development finance proposal reaches credit committee, one of the first questions lenders ask is whether the exit is credible. That means the plan has to be grounded in hard evidence rather than assumption. If the exit is by sale, lenders will expect to see demand backed up by recent comparables, reservation data, or even pre-sales. If the exit is by refinance, they will want to see that the anticipated rental income aligns with prevailing stress tests and that valuations are in line with market reality.
Timing is another factor. Borrowers sometimes forget that marketing and legals can add months to the process. A project that completes on site in December may not generate enough sales or refinance completions before the loan expires in March. Lenders will look carefully at these timelines and often require a Plan B to demonstrate that the borrower retains control over repayment even if the first route is delayed.
The mistakes developers make around exits are remarkably consistent. One of the most common is overestimating GDV, sometimes by relying on sales achieved in buoyant conditions that no longer apply. Another is underestimating the time required for marketing and conveyancing, which can leave a loan dangerously close to expiry before funds are recovered.
Some borrowers also assume that refinancing will always be available on completion, without checking the specific affordability ratios and stress tests that lenders apply. This has caught out many developers in recent years, particularly as interest rate movements have shifted affordability calculations mid-project. Finally, cash flow planning for delays is often overlooked. A development finance loan that runs over term can incur heavy default interest, eroding profits quickly.
Not all exits are straightforward, and in many cases borrowers use creative structuring to secure a smoother path. Developers facing a timing gap between sale and refinance, for instance, may turn to short-term second charge facilities or mezzanine finance to bridge the difference. Others with multiple projects underway might use cross-collateralisation, leveraging equity in another asset to provide additional security and comfort for the lender.
These solutions require careful structuring, but they can make the difference between a deal that falls short and one that proceeds. At Willow, we have arranged exits where initial rental yields fell below mainstream buy-to-let criteria, but by restructuring the facility and presenting a stronger overall portfolio picture, we unlocked refinance terms that satisfied both borrower and lender.
The most successful developers begin their exit planning as soon as they begin their finance application. They stress-test GDV assumptions against current local data, take advice on rental yields, and check long-term mortgage affordability criteria early rather than leaving it to completion. They also maintain flexibility, keeping both sale and refinance routes open until the market dictates which is best.
This approach not only reassures lenders but protects the developer’s bottom line. By anticipating how the project will be repaid from the very beginning, borrowers reduce the risk of expensive delays, default interest, or forced sales.
At Willow Private Finance, exit planning is not treated as an afterthought—it is central to how we structure every development finance deal. Our role is to balance the borrower’s commercial objectives with the lender’s appetite, ensuring that the strategy is both realistic and resilient.
One recent example was a £5m refinance for a London developer. The client initially intended to sell all units but faced slower-than-expected demand. Willow restructured the exit into a part-sale, part-refinance solution, unlocking a long-term facility that allowed the developer to retain income-generating stock while satisfying the lender’s repayment criteria.
This is precisely where specialist advice adds value. Development exits can appear simple in theory, but the detail of lender requirements, valuation sensitivities, and timing risks can derail even well-planned projects. Having an experienced broker to anticipate these issues can save borrowers both money and opportunity.
Book a free strategy call with one of our mortgage specialists.
We’ll help you find the smartest way forward—whatever rates do next.
Experience. Integrity. Trust.
About the Author — Wesley Ranger
Wesley Ranger is the Founder and Director of Willow Private Finance. He has spent over 20 years working with UK and international clients, particularly in the Middle East, on property finance strategies ranging from prime London townhouses to complex multi-unit developments. Wesley leads Willow’s team of specialist advisors, structuring bespoke lending solutions that balance lender requirements with borrower goals.
Important Notice:
This article is for information purposes only and does not constitute financial advice. Development finance carries risk, including the risk of default or repossession if loans are not repaid. Exit strategies should be assessed carefully and tailored to individual circumstances. Always seek professional advice before entering into any finance agreement. Willow Private Finance is directly authorised and regulated by the Financial Conduct Authority (FRN: 588422).
