Developer equity release from a completed development

What lenders want the released cash to be for

Development exit lenders will nearly always ask what the released equity is going to fund, and the answer changes how easily the facility gets agreed. A cash-out earmarked for the next site, a land deposit or the first tranche of a new build programme is a lender comfortable, because it keeps the money inside property and demonstrates a repayment discipline. A cash-out drawn to pay a dividend, clear unrelated debt or take the profit off the table is a harder sell, and some funders will not advance the surplus at all on that basis. What they lend against is a finished, saleable asset and the stock still to sell, not a track record of trading, so a strong scheme with a weak use of proceeds still stalls. Expect the surplus to sit comfortably inside the loan to GDV ceiling with the security still covered, a credible sales programme or refinance as the exit, and, in most cases, a personal guarantee from the principals: the guarantee is standard on unregulated commercial lending of this kind, and its size is negotiated against the strength of the exit rather than waived. Specialist lenders such as Octane Capital, United Trust Bank and Together publicly operate in this market, criteria change and nothing here is an offer. We document the completion evidence, the GDV and the intended use of the cash before the facility draws.

The trapped-equity math above your redemption figure

The amount you can release is decided by two numbers moving apart. A development loan is typically sized on cost, often drawing to around 60 percent of the total build and land spend, and it stays fixed at that figure. The finished scheme, by contrast, is valued on gross development value, and on a scheme that has gone to plan the GDV sits materially above the cost the loan was measured against. The cash-out facility is sized on that GDV, indicatively capped around 70 percent, so the money available is the new facility minus what it takes to redeem the development lender. Put simply, if a scheme cost two million pounds and drew a loan near one and a fifth million, but values on completion at three million, a facility at 70 percent of GDV is roughly two point one million, which redeems the development loan and leaves close to nine hundred thousand pounds of surplus to release, before retained interest and fees. The headroom is largest where the finished value has pulled well clear of cost and the leftover stock sells readily in its local market. Before we approach lenders we model the loan to GDV, the redemption figure and the net cash the deal frees up. Every band here is indicative, moves with the lender and the scheme, depends on principal sign-off, and is not an offer.

What releasing the equity costs each month

A cash-out on a finished scheme is priced as completed-asset risk, which normally lands below the development finance it clears, at something like 0.65 to 0.95 percent a month now that construction risk has gone. Alongside that monthly cost you should budget for a lender arrangement fee of roughly 1 to 2 percent of the facility, a valuation on the completed GDV, both sides' legal costs, and in some cases an exit fee taken on redemption. Because the interest is normally rolled up rather than paid monthly, the cash that actually reaches you is the released surplus net of those deferred costs, and the figure that matters is the all-in cost over however many months the facility runs. Time is the real lever here: a release held for four months while the next site draws down costs a fraction of one carried for the full eighteen, so the discipline is to draw only when the money is needed and redeem as soon as the units sell. Our broker fee is set out in writing, we price the full cost stack across the expected term, and we never present ourselves as tied to a panel or bound to a single lender. These are indicative figures, not an offer of finance.

Second charge or a bigger first charge for the cash-out

There are two ways to release the equity, and the right one turns on the development loan you already hold. A bigger first charge refinances the whole senior debt onto a single new facility that both redeems the development lender and pays out the surplus, which is clean, puts everything on one rate, and suits a scheme where the development loan is expensive or close to maturity. A second charge leaves the development loan in place and sits a smaller facility behind it, releasing only the cash-out slice, which suits a case where the senior debt is cheap, has time left to run, and carries an early repayment charge you would rather not trigger. The trade-off is cost and control: a second charge lender prices for the junior position and needs the first charge lender to consent, while a bigger first charge is usually cheaper per pound but resets the whole loan. Personal guarantees follow the structure, and a second charge can sometimes keep the incremental guarantee smaller than a full refinance would. We map both routes and place the one that frees the capital at the lowest all-in cost for the position you are in. The pillar page at /solutions/development-exit-loans/ sets out the wider exit picture, and /solutions/refinance-a-development-loan/ covers the full refinance route.