Short-Term Solutions

kelly40892
Oct 22
2 min read

For property investors and developers, securing finance quickly is often the difference between seizing an opportunity and missing out. When dealing with short time frames or complex transactions, two short-term finance options dominate the landscape: Bridging Loans and Development Finance. While both are secured against property, they serve distinctly different purposes and must be used strategically.

Bridging Loans | The Short-Term Sprint

A bridging loan is a rapid, short-term funding solution designed to literally "bridge" a financial gap.

Purpose

Primarily for speed and acquisition. Used to purchase property quickly (like at auction), break a chain, or acquire a site before full planning permission is secured.

Term

Typically 1 to 18 months (rarely over 2 years).

Cost Structure

Higher interest rates, often calculated and charged monthly or rolled up and paid upon exit. Arrangement and exit fees are common.

Exit Strategy

Repayment must come from a clear, credible plan, usually refinancing onto a long-term mortgage or securing full development finance.

Brentor Insight

We use bridging strategically to secure high-value land or complex commercial sites that require rapid completion before transitioning to a more comprehensive funding structure.

Development Finance | The Structured Marathon

Development Finance is a purpose-built loan facility structured specifically for construction and large-scale refurbishment projects.

Purpose

Funding the entire construction process, covering both the purchase of the land/property and the costs of the build.

Term

Typically 12 to 36 months, matching the project timeline.

Cost Structure

Lower interest rates than bridging loans (as they are tied to a fully planned project), with funds released in staged payments after an independent surveyor signs off on completed work.

Exit Strategy

Repayment is achieved through the sale of the completed units or refinancing the finished asset onto a long-term investment mortgage.

Brentor Insight

Our C2R (Commercial-to-Residential) and ground-up builds are primarily funded through development finance, as it aligns funding release with project milestones, ensuring optimal cash flow management.

Top Tip | If you need cash now to secure a deal, think Bridging. If you need staged funding to cover building costs over 12+ months, think Development Finance. Choosing the wrong tool can be an expensive mistake.