Pre-completion finance is a loan designed for construction projects that are close to completion, but not signed off. Similar to Exit finance, Pre-completion finance is an option for developers who are nearing the end of their existing loan term and need additional time to finish the build, prior to being sold or refinanced. Pre-completion finance is usually short-term, typically 3 to 12 months.
Why might a developer need pre-completion finance?
Sometimes property projects don’t go to plan; there might be a delay with the materials, longer construction times than forecast, or delays caused by weather or sickness. Whatever the reason, property developers might find themselves nearing the end of their development finance term before the project is completed. This puts them at risk of penalties and charges which will eat into their profits.
Pre-completion finance is designed to buy out an existing development loan and provide a new loan, lasting until the project is complete and sold.
A pre-completion loan may look like a development loan in its terms but is taken out at a much later stage and nearing the end of construction. A pre-completion loan could be agreed upon quickly, very useful for bridging an unexpected gap in a project.
What is the difference between ‘Pre-completion’ and ‘Exit’ Finance?
Both types of loan are provided towards the end of a project to allow a developer to extend the finance terms of a development.
The key difference is the stage in which the loan is taken out. Pre-completion loans are provided before a development is signed off. For example, the structure of a property may be finished and watertight, but the internals are yet to be done. With Exit finance, the development will be complete and signed off by Building control but may be experiencing a delay in the sale.
For the lender, a Pre-completion loan is usually deemed riskier than Exit finance given the project is yet to be signed off and the unknown elements of the build prior to the new lender being involved. Most banks and larger lenders won’t offer development loans mid-project or nearing completion given the above.
Hunter Finance Pre-Completion Loans
As we lend our own Money, Hunter Finance takes a humanistic approach to each loan request rather than a ‘tick box’ system. We evaluate each project individually under its own merit allowing us to tailor an offer best suited to the build and developer.
We are able to offer pre-completion loans of up to £2.5 million for a term of up to 14 months and on properties at every stage of the build. As we use our own funds, we can also make fast decisions on our development loans and provide you with a decision and offer within 24 hours.
Apply in Principle
If you have a property development project which is nearing the end of its finance term whilst still mid-project, get in touch. We consider all projects across the Southeast of England from both new and experienced developers.
