The differences between bridging and development finance: drawdown, assessment basis, cost, monitoring and which suits your project.
- Published
- 1 August 2026
- Reading time
- 5 minutes
Bridging and development finance are both short-term, secured property lending, and the two overlap for refurbishment projects. But they are structured differently and suit different situations.
| Bridging finance | Development finance | |
|---|---|---|
| Purpose | Purchase, refurbishment, capital raise, exit | Ground-up build or major conversion |
| Drawdown | Usually in full at completion | Land tranche, then staged against works |
| Assessment basis | Loan to value of the security | Loan to cost and loan to GDV |
| Monitoring | Rarely | Monitoring surveyor signs off each drawdown |
| Interest | Serviced, retained or rolled | Usually rolled up |
| Typical term | 3 – 24 months | Build programme plus sales period |
When bridging is the right tool
Bridging suits transactions where the capital is needed at the outset and the works, if any, are limited. Auction purchases, chain breaks, light refurbishments and capital raises all fit. Some lenders offer heavy refurbishment bridges assessed against the end value, which blur the line with development finance.
When development finance is the right tool
Development finance suits projects where the majority of the cost is incurred after purchase: new builds, conversions and structural works. Staged drawdowns keep interest costs down because you only pay interest on money you have drawn, and monitoring gives the lender confidence to fund a higher proportion of the total cost.
Cost comparison
Development finance often carries a lower headline rate than heavy refurbishment bridging but adds monitoring and higher professional fees. The right comparison is the total cost of finance against the total project cost, which we model for every deal.
