When refinancing is the right exit
Development finance is short-term (12–24 months) and must be repaid on completion. If you're selling all units, the sales proceeds repay the loan. But if you're retaining some or all units as investments — rental income, portfolio building, or build-to-rent — you need to refinance onto a long-term mortgage.
Refinance options
Buy-to-let mortgage (individual units)
The most common refinance route. Each completed residential unit gets its own BTL mortgage. Rates are typically 4–6%, with 75% LTV on the completed value. If you've built well and values stack up, the BTL mortgage amount often exceeds your per-unit development cost — meaning you pull equity out.
Portfolio/multi-unit mortgage
If you're retaining multiple units, some lenders offer portfolio mortgages covering all units under one facility. This simplifies administration but may offer slightly less competitive rates than individual BTL mortgages.
Commercial mortgage
For commercial or mixed-use elements of the development. Terms are typically 5–25 years, 65–75% LTV, with rates higher than residential BTL.
Mixed exit
Sell some units to repay the development finance and refinance the retained units. This is the most common approach for larger schemes — sell enough to clear the debt, retain the rest as investments.
Timeline — when to start
- 3 months before completion: Start researching BTL/commercial mortgage options. Get agreement in principle.
- 2 months before: Submit formal application. Instruct valuation on the near-complete property.
- 1 month before: Mortgage offer received. Solicitors working on legal transfer.
- On completion: BTL mortgage draws down, development finance is repaid.
Don't wait until the development finance term is about to expire. Extensions are expensive (default rate interest) and signal poor planning to future lenders.
Key considerations
- 6-month rule: Many BTL lenders require 6 months of ownership before lending at the new value. If you complete in month 14 of an 18-month facility, you may not have time. Use day-one refinance lenders or factor the 6-month period into your development finance term.
- Rental demand: If you're refinancing to BTL, the lender assesses rental income coverage (typically rent must be 125–145% of monthly interest). Research local rents before committing to retain units.
- EPC ratings: New-build properties should achieve EPC A or B. For conversions, aim for EPC C minimum — some lenders now require this, and the Minimum Energy Efficiency Standard (MEES) will tighten further.
- Multiple lenders: You don't have to refinance all units with the same lender. Shop around for the best rates per unit.
Getting the best refinance terms
The development finance stage sets you up for a good refinance. A well-structured deal with realistic GDV, completed on time and on budget, gives BTL lenders confidence. Assesr's credit paper includes exit strategy analysis showing refinance viability — so you know before you start whether the numbers work for retention.