For developers and landowners
Bridge Loan vs Development Finance for Property
Sviatoslav JerdetchiiCEO & Founder of Craftex. Updated , 6 min read
The short answer
A bridging loan is short-term money to buy a site or cover a gap, often before planning is granted. Development finance pays for the build itself, released in stages as the work is done.
- On a property development, a bridge often buys the site and is repaid by refinancing into a development loan once consent arrives.
- Bridging Trends reported an average bridging term of 12 months and an average completion time of 46 days in Q2 2026.
- The main risk of a bridge is the exit: planning, valuation or a sale that takes longer than the term.
- Both lenders ask for evidence: an appraisal, the planning position, a credible build cost, a programme and a clear exit.
A bridging loan is short-term money to buy a site or cover a gap, often before planning. Development finance pays for the build itself, in stages, as the work is done.
On a property development, a bridge loan often comes first. It buys the land, then a development loan repays it once consent arrives. The risk sits in the gap between them.
If planning or the build runs past the bridge term, you pay to extend or re-bridge. So the choice depends on where your scheme is today, and on how ready your evidence is.
This guide covers what each loan funds, how the market describes speed and terms, and where a bridge-to-development plan can break. Figures quoted are market averages from a named report, never our terms. We do not lend, arrange loans or advise on credit.
We prepare the scheme lenders read for property development finance: appraisal, planning position, build cost and programme. Then we introduce you to the lenders we work with on our own projects. Our development schemes run from £3M to £150M GDV. Start with a free scheme review and see your scheme set out the way a lender reads it.
What a bridging loan and development finance each fund
A bridging loan is usually advanced as one sum against a property. Developers use it to buy a site quickly, buy at auction, or hold a site while planning is decided. The lender looks mainly at the property's value and at how the loan will be repaid.
Development finance funds a build. The lender agrees a facility before work starts and releases it in stages as work is done. Your own equity normally goes in first. A monitoring surveyor checks progress for the lender, and their certificate comes before each drawdown.
| Question | Bridging loan | Development finance |
|---|---|---|
| What it pays for | A purchase or a short gap | Most of the build cost, sometimes part of the land |
| How it is paid out | Usually one advance | In stages, after each check on site |
| Planning | Often before consent | Consent normally in place |
| What the lender tests most | The property and the exit | Appraisal, cost, programme, contractor and exit |
| How it is repaid | Sale or refinance | Sale or refinance of the finished scheme |
Some bridges also carry money for works, usually refurbishment or conversion. A ground-up new build is normally a job for development finance. Our guide on how development finance works covers drawdowns and loan sizing in more depth.
Speed and terms in plain words
Speed is the reason most borrowers choose a bridge. We quote no speed or term of our own, because the lender sets both. A published market report gives a fair reference point instead.
Bridging Trends is a quarterly market report built from data supplied by several UK specialist finance packagers. It uses the FCA definition of a bridging loan: a contract with a term of 12 months or less.
Average completion fell from 53 days in Q1 2026 to 46 days in Q2. These are averages across many loans. Your own case depends on the property, the title, the valuation and the legal work.
Development finance asks for more evidence before the first drawdown. The lender tests the appraisal, the build cost, the programme and the contractor. A monitoring surveyor reviews them too. So the time to set it up depends largely on how ready your pack is.
Interest works differently as well. On many development loans, interest is rolled up and paid at the end, because the scheme earns nothing until it is finished. Every month of delay adds to the debt on either loan. That is why the programme matters as much as the price.
Our free scheme review sets the build programme against your planning timetable.
When a bridge-to-development structure fits
A bridge-to-development structure uses two loans in sequence. The bridge buys the site. The development loan then repays the bridge and funds the build. It can fit when:
- The purchase has a fixed date. An auction or a seller's deadline gives no time to arrange a full development facility.
- Planning is not yet granted. Most development lenders want consent in place before the build is funded.
- The design is still moving. You need time to fix the scheme, the cost plan and the programme.
- Conditions are still open. Pre-commencement conditions must be discharged before work starts on site.
It fits less well when consent is already in place and the pack is ready. Then a development loan that covers part of the land may avoid paying for two sets of fees. That is a question for the lender and your own adviser, not a recommendation from us.
At Allitsen Road in St John's Wood, a derelict club bought at auction, we designed and priced four options for a £6.0M GDV scheme. That is the kind of evidence the second lender reads.
Not sure whether your scheme needs a bridge at all? Send it to us for a free scheme review.
Exit risks on a bridge loan for property development
The exit is how the bridge gets repaid. On a property development, it usually means refinancing into a development loan or selling the site. Each step can slip. These are the points that most often put an exit at risk:
- Planning takes longer, or is refused. The refinance usually waits for consent. A refusal or an appeal can outlast the bridge term.
- Conditions change the numbers. Section 106 obligations, CIL or design changes can lower the value or raise the cost.
- The valuation comes in lower. The development lender values the consented site independently. A lower figure can mean a smaller loan than planned.
- The build cost is not supported. A rough rate or a quote full of provisional sums is hard to defend in a cost review.
- The term runs out. Extending or replacing a bridge costs money. Bridging Trends recorded re-bridge finance as 12% of bridging loans in Q2 2026.
The loan agreement sets what happens if the term ends unpaid. Read it before you sign, with your solicitor.
Most of these risks can be tested before you buy. Check the development appraisal, GDV and residual land value against real comparable sales. Price the build from current rates, not a rule of thumb. Plan the programme around the planning timetable and the open conditions.
Want all three done by the team that would build it? Ask us for a free scheme review.
What to prepare for the lender
Both lenders ask for evidence. The development lender asks for more, because it is lending against a building that does not exist yet. Prepare it once and it serves both loans.
The monitoring surveyor reads the same pack before the loan and checks the build against it during the works. Our guide to the development monitoring surveyor explains what they look for. If you are short of equity, read how a property development joint venture works.
This is where we come in. We prepare the appraisal, the planning position, the build cost per m² from our 2026 rates and the programme. Our own construction team prices the build, so the cost plan comes from the team that would build it. We take on development schemes from £3M to £150M GDV.
Then we introduce you to the lenders we work with on our own projects, matched to your scheme. The loan terms are set by the lender and agreed with you. Send us the site and your numbers for a free scheme review. A director calls you the same day to talk through the appraisal, build cost and programme.
The lender-ready pack
- A development appraisal, with GDV backed by comparable sales
- The planning position: what is consented and which conditions are open
- Section 106 and CIL costs, where they apply
- A build cost per m², priced line by line
- A build programme and a monthly cash flow
- The contractor's track record, insurance and reporting
- Your equity, your experience and the exit evidence
