# Bridging Finance vs Development Finance Source: https://www.cashbookfinance.co.uk/insights/bridging-finance-vs-development-finance Last updated: 2026-10-26 Author: Bjorn Laku, Director & Chief Marketing Officer (https://www.bjornlaku.com/) Publisher: Cashbook Finance Limited > Compare bridging finance and development finance for UK property purchases, refurbishment and construction, including funding stages, costs and suitable uses. FCA-registered UK lender FRN 782472 ## Bridging vs development finance. A bridge funds a short timing gap with a defined exit. Development finance funds build work, staged drawdowns and project risk. Treating one as the other creates delays, wrong pricing and weak lender fit. Written and reviewed by [Bjorn Laku](https://www.cashbookfinance.co.uk/bjorn-laku), Director & CMO. Business bridging only: Cashbook Finance does not offer regulated bridging loans secured on a home the borrower or a close family member lives in. LTV · Property → short-term capital Illustration Bridging structure check A £325,000 loan against a £500,000 property Within reference **65%** loan-to-value, against a 70% illustrative reference point - **Equity remaining** £175,000 - **Headroom to 70% LTV** £25,000 Estimated property value · £500,000 Requested gross loan · £325,000 Within a 70% illustrative LTV reference point. **Security risk:** Your property may be repossessed if you do not keep up repayments on a loan secured against it. Check eligibility · Costs and exit **£30m+** funded · **100+** UK businesses since 2019 · London SE1 - FCA **782472** - ICO **ZB545200** - Companies House **10723098** Option 1 **Bridging finance** Short-term property funding where the main issue is timing and a clear exit. Purchase/refinance/sale · Short-term · Exit-led Option 2 **Development finance** Project funding for build, conversion or refurbishment costs across staged work. Build costs · Drawdowns · Project monitoring Decision shortcut **Use this rule** Use bridging when the asset already supports the loan. Use development finance when value depends on works being completed. Existing asset · Works programme · Exit certainty - [Invoice Finance vs Overdraft](https://www.cashbookfinance.co.uk/insights/invoice-finance-vs-overdraft) - [Invoice Finance vs Business Loan](https://www.cashbookfinance.co.uk/insights/invoice-finance-vs-business-loan) - [Invoice Factoring vs Invoice Discounting](https://www.cashbookfinance.co.uk/insights/factoring-vs-invoice-discounting) - [Selective vs Full-Ledger Finance](https://www.cashbookfinance.co.uk/insights/selective-invoice-finance-vs-full-ledger) - [Trade Finance vs Invoice Finance](https://www.cashbookfinance.co.uk/insights/trade-finance-vs-invoice-finance) - [Bridging Finance vs Commercial Mortgage](https://www.cashbookfinance.co.uk/insights/bridging-finance-vs-commercial-mortgage) - [Invoice Finance Costs Explained](https://www.cashbookfinance.co.uk/insights/invoice-finance-costs-explained) - [Bridging Finance Costs Explained](https://www.cashbookfinance.co.uk/insights/bridging-finance-costs-explained) Check eligibility · About 2–3 minutes, no credit search. ### Bridging or development finance: the practical difference. The right comparison is not simply the lowest headline rate. Match the facility to the asset being funded, the evidence available, the expected duration, the operational work required and the event that repays it. A cheaper product used for the wrong job can create more delay, covenant pressure or refinancing risk than a correctly structured specialist facility. Funding logic **Purpose** Bridging suits purchases, refinance gaps, auction deadlines and light works. Repayment logic **Repayment** A bridge needs a clear sale, refinance or other exit. Main watch-out **Main risk** Poor cost control, planning or build risk can derail development funding. Check eligibility · About 2–3 minutes, no credit search. Bridging vs development finance: comparison table | Question | Usually stronger when | Watch-out | | --- | --- | --- | | Purpose | Bridging suits purchases, refinance gaps, auction deadlines and light works. | Development finance suits heavier construction or staged build costs. | | Repayment | A bridge needs a clear sale, refinance or other exit. | Development finance depends on build progress, monitoring and exit value. | | Speed | Bridging can move quickly when title, value and exit are clear. | Development facilities take more technical review. | | Main risk | Weak exit or tight LTV kills a bridge. | Poor cost control, planning or build risk can derail development funding. | Worked example ### A light refurbishment on a bridge. An investor buys a £450,000 house needing cosmetic works with a £300,000 bridge and sells in month 10. Cosmetic works fit a bridge; structural or new-build work moves the project towards development finance. Check eligibility · Talk it through with a director | Property value | £450,000 | | --- | --- | | Gross loan (66.7% loan-to-value) | £300,000 | | Arrangement fee, 1%, from the loan | £3,000 | | Interest at 1% a month, rolled up, for 10 months | £30,000 | | Repaid at exit (loan plus interest) | £330,000 | | Cost before valuation and legal fees | £33,000 | | If the exit is 3 months late | +£9,000 in interest | Illustrative: interest at 1% a month, rolled up, and an [arrangement fee](https://www.cashbookfinance.co.uk/insights/bridging-finance-glossary#term-arrangement-fee) of 1% of the loan. Valuation and legal costs are extra and quoted per case. Bridging finance is secured against property, which may be repossessed if repayments are not maintained. ### Bridging or development finance: use the comparison to make a funding decision. The scale and control of works determine whether a bridge is still the right product. #### Light works A bridge may suit limited refurbishment with a clear budget and exit. #### Heavy development Development finance usually uses monitored stage drawdowns and a detailed build appraisal. #### Risk Planning, construction, cost overrun and sales risk become more significant as the project intensifies. Examples are educational only. Eligibility, pricing, security and final terms always depend on a formal assessment of your business, your documents and the facility proposed. **Related guidance:** [Bridging finance](https://www.cashbookfinance.co.uk/bridging-finance) · [Pricing & decisions](https://www.cashbookfinance.co.uk/pricing-decisions) · [Eligibility](https://www.cashbookfinance.co.uk/eligibility) · [Case studies](https://www.cashbookfinance.co.uk/case-studies) ### More guides on bridging finance - [Bridging finance valuations](https://www.cashbookfinance.co.uk/insights/bridging-finance-valuation-guide) - [Bridging for limited companies and SPVs](https://www.cashbookfinance.co.uk/insights/bridging-loans-limited-companies-spvs) - [Refurbishment bridging finance](https://www.cashbookfinance.co.uk/insights/refurbishment-bridging-finance) - [Regulated vs unregulated bridging](https://www.cashbookfinance.co.uk/insights/regulated-vs-unregulated-bridging-loans) - [VAT bridging loans](https://www.cashbookfinance.co.uk/insights/vat-bridging-loans) - [What slows down bridging completion](https://www.cashbookfinance.co.uk/insights/what-slows-down-bridging-completion) --- Cashbook Finance. Cashbook Finance Limited is registered with the Financial Conduct Authority under Firm Reference Number 782472. Company number 10723098. Registered office: Cumberland House, 24–28 Baxter Avenue, Southend-on-Sea, Essex SS2 6HZ. Registered with the Information Commissioner’s Office under reference ZB545200. All finance is subject to eligibility, satisfactory due diligence, credit approval and agreed terms. Invoice finance, trade finance and bridging finance may not be suitable for every business. The availability, structure, amount, pricing, fees, security requirements and completion timescales of any facility will depend on the applicant’s circumstances, the quality of the supporting evidence provided and our assessment of the proposed transaction. Any figures, examples, rates or timescales shown on this website are for illustrative purposes only and do not constitute an offer, commitment or guarantee of finance. Terms and conditions apply. Bridging finance is secured against property. Your property may be repossessed if you do not maintain repayments on a loan secured against it. Applicants should obtain independent legal, financial and tax advice where appropriate.