Glossary
Extension fee
Also called: rollover fee
An extension fee is charged when a lender agrees to extend a loan beyond its original expiry date. Extensions are usually at the lender's discretion and may come with a new rate, fresh valuation or other conditions.
An example
A developer's sales are slower than expected and the construction loan is close to expiry. The lender agrees to a short extension in return for an extension fee and a reduction in the loan from settled sales.
Why it matters
An extension is not automatic. Building a realistic timeline with a buffer, and asking at the outset how extensions are handled and priced, reduces the risk of default interest or a forced refinance.
Points to check
Ask at the start how extensions are decided, how they are priced and how early you must ask. Check whether an extension requires a new valuation or a reduced loan amount, and whether the interest rate changes. If an extension is refused, find out what happens next and whether default interest would apply. Building a time buffer into the original term often costs less than relying on an extension later.
Try it: Exit timeline planner