# Bridging Lender Takeout: Refinancing a Development Exit Loan in Default

Insights article · United Kingdom · Published 2026-11-05

> Your development exit facility is past term and in default. A second bridge lender can still take out the charge if the asset and the exit still work. Here is how redemption, LTV and discharge actually run.

Your development exit loan has gone past term. Default interest is running, the incumbent will not extend, and someone has mentioned an LPA receiver (a receiver appointed under the Law of Property Act 1925).

Another bridging lender can still take out that facility if the asset and the exit still work. The job is mechanical: redeem the existing charge, pay the inflated figure, and put a new first charge on the title.

This is not a bank refinance of a performing loan. It is a short-term, asset-backed takeout sized to what you actually owe and how you will repay it.

> **Why this matters:** Default interest and exit fees can erase residual equity long before the building itself fails. We issue term sheets within 24 hours and drawdown typically takes about two weeks.

## Highlights

- A takeout refinances a defaulted development exit by redeeming the incumbent and placing a new first charge.
- Default interest and fees lift the redemption; the new loan still has to sit inside an indicative 75% LTV.
- Term sheets typically within 24 hours; typical tenor 3–24 months; loan size £1M–£100M.
- Direct private lender: we underwrite the asset and the exit, not income.
- Typical borrowers are property investors, developers and corporates; terms are indicative and subject to valuation and due diligence.
- [Talk to a specialist](https://www.rikvincapital.com/uk/contact-us)

## What the takeout actually involves

The incumbent produces a redemption statement. Ask for a split of:

- principal still outstanding
- contractual interest and default interest
- exit fees, costs and the daily rate after the quoted date

Your solicitor then gives undertakings to use the new funds to discharge the existing charge on completion. Until the incumbent provides a deed of release for registration at [HM Land Registry](https://www.gov.uk/government/organisations/land-registry), the new lender cannot take a clean first charge.

Funds, discharge and the replacement charge have to land on the same day. If the incumbent's solicitors are slow, that is the delay, not the credit decision.

## How default interest collides with a 75% LTV ceiling

If the original facility was already close to value, months of default interest can push the redemption above what a new loan can support. A [developer exit bridging loan](https://www.rikvincapital.com/uk/bridging-loans/developer-exit-bridging-loans) is still capped at an indicative 75% LTV. We will not stretch past that ceiling to make the numbers work.

You inject equity, you accept a lower sale price that still clears, or the takeout does not proceed. [Sizing the loan against unsold stock](https://www.rikvincapital.com/uk/insights/developer-exit-finance-uk-loan-sizing-unsold-stock) is the same discipline here: the exit has to cover the figure on the statement, not the figure you hoped to owe.

## Why another bridging lender will still fund

The incumbent is protecting a book that has already gone past term. A new bridging lender is underwriting a fresh first charge against today's value and a dated repayment route: a sales campaign, a refinance onto term debt, or completed-unit take-up.

That is why [refinancing bridging loans](https://www.rikvincapital.com/uk/bridging-loans/refinancing-bridging-loans) exist as a product, including where the outgoing facility is in default. We are not a bank. We lend mainly to property investors, developers and corporates, against the asset and the exit.

Related: [an £18.8 million facility secured against a landmark West London hotel](https://www.rikvincapital.com/uk/case-study/18-8-million-loan-facility-secured-against-a-landmark-west-london-hotel). For the sequence before you instruct, [the lending process](https://www.rikvincapital.com/uk/process) sets out term sheet, valuation, KYC and drawdown.

![West London hotel exterior as first-charge security for a takeout](https://media.rikvincapital.com/rikvin-media/unsplash-1791252321851-1363.jpg)
*A first-charge takeout still needs a saleable asset and a dated exit, not just a distressed borrower.*

## When a takeout is the wrong tool

If there is no credible exit inside 3–24 months, this is the wrong instrument. The tenor is short and it costs more than a term loan. The main risk is paying a second round of fees, then defaulting again when the sale or refinance still does not land.

It is also the wrong tool if the redemption already exceeds 75% of a defensible valuation, or if title, planning or EPC issues make a sale implausible. An LPA receiver may then be the cleaner path. Compare the full [UK bridging loan range](https://www.rikvincapital.com/uk/bridging-loans) only if the security and the exit still stack.

## Frequently asked questions

### Will a new bridging lender refinance a loan already in default?

Yes, if the asset still supports the redemption inside an indicative 75% LTV and the exit is real. Default itself is not a bar. We underwrite the security and the repayment route, not the incumbent's refusal to extend. A term sheet can usually follow within 24 hours. Terms are indicative and subject to valuation and due diligence.

### What must the redemption statement include?

It should split principal, contractual interest, default interest, exit fees and costs, and quote a daily rate after the stated date. Your solicitor uses that figure to size the takeout and to give discharge undertakings. Without a current statement, a new first charge cannot complete.

### How quickly can a takeout complete?

A term sheet can usually be issued within 24 hours. Drawdown is typically about two weeks once valuation, KYC and the incumbent's discharge mechanics are in train. Urgent files can be shorter. Nothing is committed until due diligence and the redemption figure are confirmed.

### What if I already owe more than 75% of value?

Then a first-charge takeout will not close the gap on its own. You need equity in, a lower exit price that still clears, or a different strategy. Folding the shortfall into another short-term loan is how a second default starts. We will not imply otherwise.

## The bottom line

A defaulted development exit is a title and numbers problem first. If those two still work, a takeout is a practical tool. If they do not, more short-term debt will not save the scheme.

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