Development exit finance interest rates: what drives your price
The interest rate on a development exit bridge is not one number, it is a band, and where your scheme lands inside it is decided by a short list of things you can influence. This guide takes the rate apart: the indicative band and why it exists, the five drivers that price it, the three ways interest can be charged, and how to compare quotes on the number that matters.
Development exit finance interest rates are quoted as a monthly charge, indicatively 0.65 to 0.95 percent per month at sensible leverage, and the figure is a band rather than a fixed price because each lender prices your specific scheme. Where you sit in the band is set by five things: the loan to gross development value, the scheme type, the depth of the local market, the sponsor track record and how credible the exit is. Interest can be retained from the advance, rolled up onto the balance or serviced monthly, and the treatment changes your day-one net loan without changing the rate. Because the rate alone does not tell you the cost, quotes should be compared on total cost of credit, not the headline. We arrange and place this finance as an introducer rather than a lender, and each figure shown is indicative only, never a finance offer.
At a glance
- Indicative band0.65 to 0.95 percent per month
- Why a bandEach lender prices your scheme, not a list
- Five driversLTGDV, scheme, location, sponsor, exit
- Interest treatmentsRetained, rolled or serviced
- Compare onTotal cost of credit, not headline rate
- TermIndicatively 6 to 18 months
Why a development exit rate comes as a band, not a fixed figure
A development exit finance interest rate is the monthly charge a bridging lender applies to the loan that clears your development facility once a scheme is finished or all but finished. Across the market that charge sits, indicatively, in the region of 0.65 to 0.95 percent per month at sensible leverage, and it is quoted as a band rather than a single price. The band exists because a bridging lender does not publish one rate and apply it to everyone: it prices each scheme against its own risk, so two developers with different schemes can be quoted at opposite ends of the same band on the same day.
The lower end of the band is reserved for the cleanest cases: a finished residential scheme in a liquid location, a conservative loan to gross development value, an experienced sponsor and a proven exit. The upper end reflects anything that makes the loan harder to underwrite or slower to repay, such as a thinner local market, a higher day-one advance or a first scheme. Treat the 0.65 to 0.95 percent figure as an indicative frame for reading a quote rather than a price on offer, and every number in this guide is illustrative and not an offer of finance.
The five drivers that decide where you land in the band
Five drivers do most of the work in setting the monthly rate on a completed-scheme bridge. Each pulls the price toward the keener end of the band or the wider end, and they compound, so a case strong on all five prices very differently from one weak on three. The table sets out each driver and what moves it in either direction.
| Pricing driver | Pulls the rate keener when | Pushes the rate wider when |
|---|---|---|
| Loan to gross development value | The advance sits well below the ceiling | It pushes toward about 70 to 75 percent LTGDV |
| Scheme type | Standard residential units that sell one by one | Specialist, commercial or single large lot exits |
| Location and depth of market | A liquid area with active comparable sales | A thin market with few recent transactions |
| Sponsor track record | The developer has delivered similar schemes | It is a first scheme with no completions |
| Exit credibility | Reservations, sales or a refinance are evidenced | The exit is an unproven estimate of value |
Two of these are underrated. Depth of market is the lender's confidence that the units can sell inside the term, drawn from recent comparable transactions rather than an asking price, so a scheme in an active postcode prices better than an identical scheme where nothing has sold nearby for a year. Exit credibility is the evidence that the loan will repay: a signed reservation or a refinance agreement in principle carries far more weight than a valuer's opinion of what the units should fetch.
Of the five, exit credibility is the one you can strengthen in weeks rather than months. A couple of reservations on the early units, or a term-loan agreement in principle to refinance the retained stock, turns an estimated exit into an evidenced one. That is frequently what lets us place a case a notch keener inside the band, because the lender is pricing a proven repayment rather than a projection. It does not change the loan to value, but it changes how the lender feels about getting repaid.
Retained, rolled and serviced interest: one facility, three treatments
The rate is only half the story, because how the interest is charged changes what reaches your account. Retained interest is held back from the advance to cover the whole term, so you draw a smaller net loan but owe only the principal at redemption. Rolled-up interest accrues onto the balance month by month and is cleared when the loan repays, so you draw more on day one but owe principal plus interest at the end. Serviced interest is paid monthly from outside cash, so the balance stays at the principal and you keep the largest day-one advance, but you fund the payments while the units sell.
The table takes one illustrative facility and shows it under all three treatments. It assumes a gross loan of 1,000,000 pounds at an indicative 0.85 percent per month over 12 months, with an arrangement fee of 2 percent added to the facility, giving roughly 102,000 pounds of interest over the term. The rate is identical in every column; only the treatment changes.
| Interest treatment | Paid during the term | Day-one net advance | Owed at redemption |
|---|---|---|---|
| Retained | Nothing | 878,000 (less interest and fee) | 1,000,000 principal |
| Rolled up | Nothing | 980,000 (less fee only) | 1,102,000 principal plus interest |
| Serviced | About 8,500 per month | 980,000 (less fee only) | 1,000,000 principal |
The trade-off is clear across the three rows. Retained interest protects your cash flow completely but gives the smallest day-one advance, which matters if the net loan has to clear an existing development debt. Serviced interest gives the largest advance and the lowest amount owed at the end, but only works if the scheme generates cash to service it. Rolled up sits between the two. These are illustrative mechanics, not a quote, and they show why two developers on the same rate can receive very different net loans.
The headline facility is the gross loan, sized against gross development value. The net loan is what reaches you once the lender has taken off any retained interest, the arrangement fee and the completion costs. On the retained row above, a gross facility of 1,000,000 pounds delivers a net loan closer to 878,000 pounds. Always work back to the net loan before you decide whether a facility clears your existing debt and leaves the working capital you need. These are illustrative figures and not an offer of finance.
The fees that sit beyond the headline rate
A rate quote is never just a rate. Alongside the monthly interest there is a set of fees, and because several are charged on the loan or rolled into it, they can move the real cost more than a tenth of a percent on the rate would. The four to expect are set out below, each priced against your scheme rather than fixed.
- Arrangement fee: a percentage of the loan, commonly around 1.5 to 2 percent, normally folded into the facility and paid at completion instead of in cash at the outset
- Exit fee: where a lender charges one, taken at redemption and worked out on either the loan amount or the gross development value, so it is worth checking which basis applies
- Valuation fee: a scale cost for the RICS Red Book valuation the lender instructs, paid by the borrower up front because no terms are issued without it
- Legal fees: the borrower pays for the lender's solicitor alongside their own, which is the norm on unregulated commercial lending secured by a first charge
The pattern that catches developers out is the trade between the arrangement fee, the exit fee and the rate. One lender may quote a keen headline rate and recover margin through a higher arrangement fee or an exit fee charged on GDV; another may quote a fraction higher with no exit fee at all. Neither is automatically cheaper, which is why the fees have to be read alongside the rate and not after it. The loan to GDV and LTV mechanics behind these figures are set out at /learn/loan-to-gdv-and-ltv-explained/.
Total cost of credit: how to compare one rate quote with another
The only fair way to compare two development exit quotes is on the total cost of credit over the expected term, meaning the interest plus every fee, not the monthly rate in isolation. A low headline rate loaded with a hefty arrangement fee and an exit fee can work out dearer than a marginally higher rate carrying neither. The table shows two illustrative quotes on the same 1,000,000 pound facility over 12 months.
| Line | Quote A | Quote B |
|---|---|---|
| Monthly rate | 0.75 percent | 0.85 percent |
| Interest over 12 months | 90,000 | 102,000 |
| Arrangement fee | 20,000 at 2 percent | 15,000 at 1.5 percent |
| Exit fee | 10,000 at 1 percent on loan | None |
| Total cost of credit | 120,000 | 117,000 |
Quote A has the keener headline rate, yet Quote B costs less over the term because it carries a lower arrangement fee and no exit fee, so the developer reading only the rate would pick the wrong facility. Two further checks belong in the comparison: whether the rate is fixed or moves with the Bank of England base rate, and how an early redemption is treated, because a scheme that sells faster than the term allows should cost less where interest is not fully retained. A bridging cost calculator such as /tools/bridging-cost-calculator/ is a useful first pass, but the binding number is the total cost on a quote issued against your actual scheme, and each figure here is indicative only, never a finance offer.
How the wider market moves the whole band
The band itself is not static. Its floor and ceiling move with the cost of money, because a bridging lender funds itself and prices a margin on top. When the Bank of England base rate rises, lender cost of funds rises with it and the whole 0.65 to 0.95 percent frame drifts upward; when it eases, the band drifts back down. This is why we do not publish a fixed rate in advance: the competitive number this quarter may not hold next quarter, and the right figure still depends on the five drivers for your scheme.
A range of specialist lenders publicly operate in the development exit and bridging market, including Shawbrook, LendInvest, Octane Capital, United Trust Bank, Together, Paragon, Hampshire Trust Bank, Close Brothers and Atelier. They are named only as examples of funders active in this space; their criteria and pricing change constantly, and nothing here is an offer or a quote on their behalf. Each prices to its own appetite for the asset, the leverage and the exit, which is why testing one scheme across several of them finds the keenest place inside the band rather than accepting the first indicative rate offered.
How we present the rate on your scheme
As a broker and introducer, we place these facilities rather than lend, and we hold no authorisation from the Financial Conduct Authority, since a development exit bridge is unregulated commercial lending. When we take a scheme to market we present it with the loan to GDV, the sales or refinance evidence and the sponsor history that move the five drivers in your favour, then place it with the lender whose pricing and appetite fit the case, and read every indicative quote back to you on total cost of credit so the rate, the fees and the interest treatment are all visible before anything is committed.
For an indicative read on where your scheme sits in the band, confirm the build stage, commission a RICS gross development value and describe the exit route. Armed with those three, we can sketch an illustrative view covering the leverage, the monthly pricing, the fee lines and the net loan you would likely draw. The wider product sits on our pillar page at /solutions/development-exit-loans/, and any figure we relay is shown for illustration and is not a finance offer.
Development exit finance interest rates: what drives your price: common questions
What monthly interest rate does development exit finance charge?
Development exit finance interest rates are quoted as a monthly charge, indicatively in the region of 0.65 to 0.95 percent per month at sensible leverage. It comes as a band rather than a fixed figure because each lender prices your specific scheme, so a clean case at conservative loan to GDV sits near the floor while a higher-leverage or specialist scheme sits nearer the ceiling. The band also drifts with the wider cost of money. All figures are indicative only and never a finance offer.
Why is the rate quoted per month rather than as an annual APR?
A development exit bridge is a short-term facility, indicatively 6 to 18 months, that redeems as units sell or the scheme refinances, so it is run and charged monthly rather than over years. An annual figure or APR can be quoted for comparison, but the monthly rate drives the actual cost because the loan rarely runs a full year. Reading the monthly rate against the term is what tells you what the facility will really cost.
What is the difference between retained, rolled and serviced interest?
Retained interest is held back from the advance to cover the term, so you draw a smaller net loan but owe only the principal at redemption. Rolled-up interest builds onto the balance and is cleared when the facility repays, giving a larger day-one advance but a higher amount owed at the end. Serviced interest is paid monthly from outside cash, which keeps the largest advance and the lowest redemption figure but only suits a scheme that generates cash. The rate is the same under all three; only your net loan and cash flow change.
Does the lowest headline rate always mean the cheapest facility?
No. The fair comparison is total cost of credit over the term, meaning the interest plus the arrangement fee and any exit fee, not the monthly rate alone. A keen headline rate paired with a steep arrangement fee, or an exit fee levied on gross development value, can land dearer than a marginally higher rate that carries neither. Always work the two quotes out to a single total-cost figure before choosing.
Which lenders are active in the development exit market?
Specialist funders that publicly operate in the development exit and bridging market include Shawbrook, LendInvest, Octane Capital, United Trust Bank, Together, Paragon, Hampshire Trust Bank, Close Brothers and Atelier. They are named only as examples of lenders active in this space; their criteria and pricing change constantly and nothing here is a quote or an offer on their behalf. Each prices to its own appetite, which is why testing one scheme across several of them tends to find the keenest place in the band.
How does the Bank of England base rate affect my development exit rate?
A bridging lender funds itself and charges a margin on top, so its cost of funds tracks the Bank of England base rate. When the base rate rises the whole indicative band drifts upward, and when it eases the band drifts back down. This is why no responsible arranger publishes a fixed rate far in advance: the competitive number moves with the market, and the right figure still turns on the leverage, the asset and how strong the exit is. Any band we quote back is indicative only and not a finance offer.
Can a first-time developer still get a competitive rate on an exit bridge?
Yes, though sponsor track record is one of the five drivers, so a first scheme with no completions tends to price nearer the wider end of the band. A first-time developer can offset that by strengthening the other drivers: a conservative loan to GDV, a scheme in a liquid market and, above all, evidenced exit through reservations or a refinance agreement in principle. Presenting a first scheme well is often what closes most of the gap to an experienced sponsor's pricing. All figures here stay indicative and are not a finance offer.
How do I get an accurate rate for my own scheme?
An accurate rate comes from a lender quoting against your actual scheme, not from a published band, because the five drivers are case-specific. The practical starting point is to confirm the build stage, obtain a RICS gross development value and set out the exit, then test the case across several lenders. A development exit loan calculator at /tools/development-exit-loan-calculator/ gives a useful first pass, and we can present the scheme to funders and read every quote back on total cost of credit. Each figure is indicative only and never a finance offer.
Put this guide to work
Describe your scheme, the balance outstanding and the redemption date. Inside one working day you will know whether it funds and on roughly what terms.