Key facts: Bridging funds purchases and refurbishments in one or two advances over up to ~12 months. Development finance funds land plus build costs in staged drawdowns against a project appraisal, sized on gross development value (GDV), over 12–36 months. The dividing line is scale: cosmetic-to-heavy refurb suits bridging; structural builds and conversions suit development finance.
What bridging suits
Buying at auction, buying unmortgageable property, and refurbishing — new kitchens and bathrooms through to significant works without major structural change. Funds come largely upfront, interest rolls up, and the exit is sale or refinance. Lenders assess the property and your exit more than the project plan. See renovation bridging for structures including purchase-plus-works.
What development finance suits
Ground-up builds, knock-down-rebuilds, and major conversions — offices to flats, single houses to multiple units. The lender funds a percentage of land cost plus build costs, released in arrears-based drawdowns as a monitoring surveyor signs off each stage. Pricing and leverage key off GDV and your track record; first-time developers face lower leverage and stronger scrutiny. Our development finance guide covers the mechanics.
How the costs differ
Bridging: monthly interest on the whole balance from day one, plus arrangement and legals. Development: interest accrues only on funds drawn, so early months are cheap and the cost curve rises with the build — plus monitoring surveyor fees and typically both arrangement and exit fees. For a genuine build, development finance's drawdown structure usually beats paying bridging interest on money sitting idle; for a purchase-and-improve, bridging's simplicity wins.
The grey area — heavy refurb
Big refurbishments with some structural work sit between the products, and both markets will quote. Decide on three tests: does the project need staged funding to control costs? Is the works budget a large fraction of the purchase price? Will the property be uninhabitable for months? Two or three yeses lean development-style funding (or heavy-refurb bridging with staged release — a hybrid many lenders offer).
Choosing with real numbers
A specialist broker will appraise the project both ways — total cost under bridging vs development structures — and place it where the numbers and the lender appetite align. Find a specialist through Nesto — free, no obligation.
Frequently asked questions
Can I use bridging for a ground-up build?
Generally no — new builds need staged funding against a build programme, which is development finance's structure.
What is GDV?
Gross development value — the end value of the completed project, the anchor for how much development lenders advance.
Do I need experience for development finance?
It strongly affects leverage and pricing. First-timers can borrow with a strong professional team, more equity and modest scale.
What funds the gap between stages?
Drawdowns are usually paid in arrears against certified work, so you need working capital to cash-flow each stage before reimbursement.