Quick comparison at a glance

Two short sentences to lock it in: development finance covers the full build with staged drawdowns and underwriting based on costs and Gross Development Value (GDV). Bridging loans are short-term, faster and generally more expensive per month — used to bridge timing gaps or complete quick purchases.

What is development finance?

Development finance is a purpose-built facility that funds property development projects — from land acquisition through construction to disposal or letting. Lenders underwrite development loans against a project’s cost plan and Gross Development Value (GDV). The focus is on the viability of the scheme, build costs, contractor strength and the promoter’s track record.

Key features:

• Staged drawdowns: funds released at agreed milestones after inspections.
• Underwriting based on GDV and Loan-to-Cost (LTC) metrics rather than simple valuation lending.
• Interest can be rolled up or serviced monthly depending on the lender.
• Typical LTC/LTV ranges vary by scheme and experience — lenders assess risk conservatively.
• Exit must be clear (sales, re-mortgage, forward funding).

Typical borrowers include limited companies, property developers and construction businesses with projects such as small housing schemes, conversions, or larger mixed-use developments. If you are planning a build and need structured funding rather than quick cash, development finance is usually the right path. Get development finance options — Free Eligibility Check.

What is a bridging loan?

A bridging loan is a short-term, asset-backed loan that “bridges” a timing gap — for example, to secure land at auction, complete a fast buy, or provide temporary funding while you refinance or wait for planning. Bridging lenders focus on speed and the value of the security property.

Key features:

• Very fast decisions and completions (sometimes within days for experienced teams).
• Short terms — commonly up to 12 months, occasionally up to 24 months.
• Higher monthly costs and arrangement/exit fees compared with development finance.
• Repayable by sale, refinance into a development or mortgage, or another exit route.
• Flexible structures for auction purchases and urgent transactions.

If speed is the priority or you need provisional cover until a longer-term facility is in place, a bridging loan can be appropriate. For a quick bridging quote, start a no-obligation enquiry: Get a no-obligation quote.

Direct comparison: development finance vs bridging loans

Purpose & timing

Development finance funds a project lifecycle. Bridging fills short-term needs or captures time-sensitive opportunities.

Loan term & speed of drawdown

• Development: longer underwriting, staged drawdowns tied to inspections.
• Bridging: rapid funding, single-draw or short staged drawdowns, ideal for auctions.

Security and underwriting

Both are secured on property, but development lenders place emphasis on cost plans, professional teams and GDV. Bridging lenders focus on the security value and exit clarity.

Cost & fee structure

• Development: interest spread across the project term; arrangement fees and monitoring fees are typical.
• Bridging: higher monthly rates, arrangement/exit fees, often more expensive per month but shorter overall.

Repayment

Development loans are repaid via phased sales, refinance or unit sales. Bridging loans are repaid by sale of the asset, refinance to a development facility, or a longer-term mortgage.

LTV / LTC / GDV considerations

Development lenders assess Loan-to-Cost and GDV — they may accept lower LTVs but higher LTC depending on sponsor experience. Bridging lenders typically lend against a valuation and may lend up to a conservative LTV depending on security type.

Suitability by project type

• Development finance: multi-unit builds, conversions, major refurbishments.
• Bridging: auction purchases, urgent land buys, temporary cashflow gaps, last-mile funding.

Mini case studies

Case A — Small developer (6 houses): Uses development finance with staged drawdowns tied to construction milestones and sales projections. Lower monthly cost over the project term and structured exit via unit sales.

Case B — Property investor (auction purchase): Uses a bridging loan to complete purchase within days, then refinances to a development facility or mortgage once planning or tenanting is in place.

Not sure which suits your project? Start a free eligibility check and we’ll match you with lenders and brokers who specialise in your type of development.

How lenders assess construction projects

Lenders look for a clear, realistic plan and evidence the project can be completed and exited. Core assessment criteria:

• Promoter experience and track record (CVs, company history).
• Detailed cost plan and contractor tenders.
• Professional team: architect, QS, contractor and project manager details.
• GDV appraisal and comparables.
• Planning status and conditions.
• Cashflow forecasts and contingency allowances.
• Clear exit strategy (sales programme, refinance route or forward funding).

Typical documents lenders request: costplans, planning documents, contractor contracts, company accounts, CVs of key people, development appraisals and site valuations. Bridging lenders often require quicker valuations and clearer near-term exit evidence.

Prepare a good pack and you’ll speed up decisions. If you’d like a checklist to prepare for enquiries, we can help — Get matched with a lender/broker.

Costs, interest and fees: practical guidance

Costs vary widely by lender, project complexity and borrower experience. The following ranges are indicative — not quotes.

• Development finance: Interest typically charged monthly or rolled up; arrangement and monitoring fees apply. Loan-to-cost commonly up to c.65–80% of costs depending on experience and the scheme (conservative assessment recommended).
• Bridging loans: Higher monthly rates, arrangement fees and exit fees are common. LTVs often up to c.70–75% against security value for experienced borrowers but will vary greatly.

Example comparison (illustrative only): a 12‑month bridging facility may cost more in monthly interest and fees than a development facility spread across 18–24 months. Always obtain personalised quotes — Request a free quote and we’ll match you with providers who can give tailored pricing.

Compliance note: Costs and rates vary by lender and are subject to their assessment. Submitting an enquiry is a free, no‑obligation eligibility check and is not an application.

When projects switch: bridging then development (and vice versa)

Common financing flows:

• Use bridging to secure land quickly (e.g., auction), then refinance to development finance when planning and build costs are agreed.
• Use a short bridging facility to cover a development shortfall while you arrange a longer-term top-up or negotiate forward funding.

Be wary of stacking fees when using multiple facilities and ensure exits line up with lender covenants. A blended solution can work well but needs careful structuring by an experienced broker.

If you need a blended or staged structure, get matched with specialists who structure paired facilities.

Choosing the right lender or broker

Tips to select the best partner:

• Choose lenders and brokers with specific development or bridging experience for your project type.
• Ask for case studies of completed schemes similar in size and location.
• Check timelines — specialist lenders often move faster and understand construction timing.
• Ask upfront about fees, monitoring and valuation cadence to avoid surprises.

UK Business Loans connects you quickly to vetted lenders and brokers who specialise in construction finance and can arrange facilities from about £10,000 upwards. For more construction-specific support and sector resources see our construction page on construction business loans.

We’re an introducer — not a lender or financial adviser. Submitting an enquiry is a free, no‑obligation eligibility check. By enquiring you consent to be contacted by our selected lenders and brokers.

FAQs

Which is cheaper: development finance or bridging?

Over a full project term development finance is generally cheaper per unit of value. Bridging is more expensive per month but valuable for speed. Exact costs depend on lender, project and exit clarity.

Can I move from bridging to development finance?

Yes — many projects use bridging to secure land, then refinance into development finance once planning and costs are confirmed. Lenders will reassess the project before refinancing.

How quickly can I get a bridging loan?

Bridging loans can complete from a few days to a few weeks depending on valuation, legal and security checks. Development facilities usually take longer due to detailed underwriting.

What counts as a valid exit strategy?

Sale of completed units, progressive sales, refinance to mortgages or a formal forward funding agreement. Lenders want a realistic, evidence-backed plan.

Will enquiring affect my credit?

Submitting our initial enquiry does not affect your credit score. Lenders or brokers you are matched with may perform credit checks later as part of their underwriting.

Still have questions? Speak to a specialist — Get Quote Now — Free Eligibility Check.

Ready to compare lenders and get tailored quotes?

If your project needs speed, structure or a blended facility, UK Business Loans can match you with lenders and brokers experienced in development finance and bridging. Our service is free to use and there is no obligation to proceed.

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We’re an introducer — not a lender or financial adviser. Submitting this form is a free, no‑obligation eligibility check. By enquiring you consent to be contacted by our selected UK lenders and brokers.