The core difference
A bridging loan is advanced in full at completion against the current value of a property. Development finance is advanced in stages: a land or day-one tranche, then construction drawdowns released in arrears against a monitoring surveyor's certification of works completed.
That single difference drives everything else — pricing, paperwork, monitoring, and how much of the project cost you must fund yourself.
Which fits which project
Light refurbishment where the property remains habitable and there is no structural or planning change is usually bridging territory. Heavy refurbishment, conversion, change of use and ground-up construction sit with development finance, because the lender needs control over staged spend and a view on gross development value.
Bridging also covers non-construction uses entirely: chain breaks, auction purchases, refinancing an expiring facility, buying below market value, or releasing equity while a longer-term facility completes.
Cost and leverage
Bridging typically runs 0.6–1.2% per month, up to 70–75% loan-to-value, with a 1–2% arrangement fee and often an exit fee. Development finance is quoted on total cost — commonly up to 65–70% of gross development value or 80–90% of total costs — at 7–12% a year plus arrangement and exit fees, with monitoring surveyor costs on top.
Because development drawdowns are staged, interest accrues only on funds released, which usually makes it cheaper than bridging the whole build cost from day one.
Exit is what gets underwritten
Both are short-term and both are underwritten on the exit, not the monthly payment. A credible exit is a sale with comparable evidence or a term facility with an indicative offer already in hand. Where the exit is refinance, expect the lender to stress test the term lender's criteria before committing.
Weak exits are the most common reason short-term property applications fail, and the most common reason projects need expensive extensions.
Frequently asked questions
Can I use a bridging loan for a ground-up build?
Rarely, and it is usually expensive. A bridge funds the land purchase quickly, then development finance refinances it and funds construction in stages.
How fast can each complete?
Bridging commonly completes in two to four weeks, sometimes faster on clean title. Development finance typically takes six to ten weeks because of valuation, appraisal and monitoring set-up.
Is planning permission required?
For development finance, yes in almost all cases. Bridging can fund a site pre-planning, but at lower leverage and higher pricing.
Last reviewed: 2026-08-15