Not every development sells out at completion. Even in prime markets, sales can take time, buyers may face mortgage delays, and market sentiment can soften unexpectedly. For developers, the problem is stark: the finance facility matures, repayment is due, and sales proceeds have not yet materialised.
In The Cost of a Failed Exit, we saw how these scenarios can spiral into default, penalties, and reputational harm. But a failed exit is not inevitable. In many cases, developers can refinance unsold stock into longer-term facilities, creating breathing space to sell at full value rather than under pressure. This article explores how refinancing with unsold stock works, the challenges it presents, and how to structure solutions that satisfy lenders in 2025.
Unsold units are not necessarily a sign of a failed project. More often, they reflect timing mismatches. A block of flats may complete in December, but buyer completions drift into the following spring. In regional towns, buyer demand may be slower than expected, even for well-priced stock. Or in markets where mortgage approvals are harder to secure, buyers simply take longer to transact.
The problem is not the quality of the scheme, but the rigidity of finance timelines. Development loans and bridging facilities are short term by design, and lenders expect repayment at maturity. Unless developers can refinance, they face default interest or enforcement even if demand exists and sales are progressing.
The principle is simple: rather than repaying the facility solely through sales, the developer refinances the completed but unsold units onto another loan. That loan may be a portfolio buy-to-let mortgage, a commercial investment facility, or even another bridge structured against the finished stock.
This provides two key benefits. First, it allows the borrower to repay the original development lender, closing out the facility on time and avoiding penalties. Second, it gives the developer more time to sell units at market value rather than accepting discounts under pressure.
The refinancing does not remove the obligation to sell, but it transforms the timeline. Instead of being forced to complete all sales within a three-month window, the developer can hold stock for twelve, eighteen, or even thirty-six months, optimising returns.
While conceptually straightforward, refinancing unsold stock is not without obstacles.
The first is valuation. A lender refinancing completed units will apply conservative market values, often below the developer’s anticipated sales price. If valuations fall short, the new facility may not cover the outstanding balance, leaving a funding gap.
The second is affordability. For residential stock refinanced onto buy-to-let mortgages, rental yields must satisfy lender stress tests. As we highlighted in Bridging to Mortgage: How to Transition Smoothly in 2025, these tests have tightened significantly, and marginal yields can undermine an otherwise sound plan.
The third is lender appetite. Not all lenders are comfortable with bulk refinancing of unsold stock, particularly in slower markets. Some prefer individual unit sales, while others limit exposure to multi-unit refinancing. Developers must know which lenders to approach and how to present their case.
Successful refinancing of unsold units begins with preparation. Developers should commission early valuations, test rental assumptions against current stress tests, and identify lenders with appetite for multi-unit stock.
In some cases, a hybrid approach works best. For example, a developer may sell part of the units to reduce the outstanding balance while refinancing the remainder. This part-sale, part-refinance strategy reassures lenders that repayment is progressing while giving the borrower more time to achieve full value on retained stock.
Another option is cross-collateralisation. As explored in Cross-Collateral Property Finance in 2025, developers with equity in other assets can strengthen their position by securing the refinance against multiple properties. This reduces lender risk and increases facility size.
A London developer completed a £12 million scheme of luxury apartments in mid-2024. Market demand was strong, but mortgage delays among overseas buyers meant only half the units had exchanged by maturity. The development facility was due for repayment, with £5 million still outstanding.
Rather than accept heavy discounts to force sales, Willow structured a refinance against the remaining units. By securing a 65% LTV facility with a specialist lender, the developer repaid the original loan on time and avoided default interest. The remaining stock was sold gradually over the following nine months, achieving higher prices than would have been possible under pressure.
The refinance preserved both margin and reputation — a clear demonstration of how strategic planning can turn potential failure into a controlled success.
Refinancing unsold stock is not just a defensive measure. In the current market, it has become a proactive strategy for developers seeking flexibility. With sales cycles lengthening and buyer affordability under strain, lenders are less willing to accept vague repayment assurances. Developers who can demonstrate clear refinance options upfront are more likely to secure development facilities in the first place.
As we noted in Why Exit Risk Keeps Lenders Awake at Night, lenders want to see Plan B exits before they release capital. A refinance strategy for unsold stock provides exactly that reassurance.
To maximise refinancing options, developers should:
These steps turn refinancing from a last-minute scramble into a planned, strategic option.
At Willow Private Finance, we specialise in structuring refinancing solutions for developers with unsold stock. Our approach combines market knowledge with lender relationships to create strategies that satisfy both borrower and lender.
In one recent case, a regional developer faced refinancing challenges when GDV assumptions were reduced by surveyors. Willow restructured the deal by combining a smaller refinance with selective unit sales, ensuring the original facility was repaid on time while preserving profitability.
In another, we worked with an international borrower whose exit relied on overseas buyers completing sales. Delays threatened default, but by securing a private bank facility against the unsold stock, we gave the borrower the breathing room needed to complete sales gradually.
For developers, the lesson is clear: refinancing unsold stock is not a failure, but a strategy. With the right structuring, it transforms risk into opportunity.
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About the Author — Wesley Ranger
Wesley Ranger is the Founder and Director of Willow Private Finance. He has extensive experience helping developers refinance unsold stock — from arranging portfolio mortgages to structuring hybrid sale-and-refinance exits. His expertise lies in creating breathing space for borrowers, allowing them to repay on time while maximising long-term value.
