Bridging finance and development funding have traditionally been treated as separate tools — one for acquisition, one for construction. But in 2025, that line is blurring. The smartest developers now structure both phases together, ensuring projects transition seamlessly from purchase to build without delays, revaluations, or lender changes that can derail timelines.
As development costs rise and lender due diligence deepens, bridging-to-development strategies are becoming an essential part of modern property finance. Investors who understand how to merge these products enjoy smoother cash flow, stronger negotiation power, and reduced funding risk.
At Willow Private Finance, we’ve seen a sharp rise in structured bridging-to-development cases across both residential and mixed-use projects. Our role is to help developers lock in certainty of funding while retaining flexibility on drawdowns, valuations, and lender engagement.
If you’re planning a new project, you may also find our related guides useful: Development Finance in 2025: What’s Changed and What Lenders Want Now and How Fast Can Bridging Finance Be Arranged?.
The UK development finance landscape in 2025 is shaped by two major forces: stabilising interest rates and stricter project scrutiny.
Mainstream lenders remain selective, focusing on experienced developers and lower leverage. Meanwhile, specialist and challenger banks are expanding their appetite for well-structured projects with full exit strategies.
Typical bridging rates have eased slightly — now ranging from 0.75% to 1.2% per month for standard cases — while development finance is settling around 7–9% per annum, depending on experience, GDV, and risk profile.
In this environment, borrowers are increasingly seeking dual-phase funding: one facility that begins as a bridge for acquisition and automatically converts into a development loan once planning or conditions are met.
A bridging-to-development facility is a structured product that evolves through two stages within a single loan agreement.
This structure removes the need to refinance mid-project, reducing risk and time delays. It also ensures continuity with one lender who understands the project from inception to completion.
The key advantage lies in speed and certainty: developers can exchange on opportunities quickly, knowing that construction funding is already secured pending pre-agreed triggers.
While the appetite for bridging-to-development lending has grown, underwriting remains disciplined. Lenders assess:
Some lenders will offer a dual-phase facility even at acquisition stage, provided the borrower can evidence feasibility and design progress. Others require formal planning consent before the transition clause becomes active.
Even well-structured projects can stumble between bridge and build phases. The most common pitfalls include:
At Willow, we help clients address these risks early — ensuring bridge terms, development budgets, and exit plans are all calibrated from the outset.
Successful bridging-to-development strategies depend on smart structuring. Key best practices include:
1. Start with a Single Lender Relationship
Using one lender for both phases ensures smooth transition, consistent due diligence, and reduced costs.
2. Secure Conditional Conversion
Agree in advance the triggers for conversion — such as planning approval or building regulation compliance — to guarantee access to build funds without fresh underwriting.
3. Model Cash Flow in Advance
A detailed drawdown schedule should align with construction milestones, VAT payments, and sales receipts to avoid liquidity stress.
4. Pre-Plan Your Exit
Identify refinance or sale routes early, and obtain indicative terms from potential exit lenders. This gives your development lender confidence in your project’s viability.
5. Package the Case Professionally
Present a full lender pack including development appraisals, cost plans, CVs, and planning documents. A professional submission can reduce approval times significantly.
Consider a developer purchasing a vacant commercial site for £1.2 million, intending to convert it into 12 luxury apartments. A standard bridging loan covers the acquisition while planning is pursued. Once approval is granted, the same facility transitions to a £2.5 million development loan — avoiding refinancing costs and securing build continuity.
This approach not only saves time and legal fees but also strengthens investor confidence, since the lender is committed through the entire project lifecycle.
Bridging-to-development structures are set to dominate mid-market and SME development finance in 2025–2026. As private lenders and institutional funds continue to compete for deal flow, borrowers will benefit from increasingly flexible and bespoke facilities.
We expect to see:
For developers, the message is clear — plan financing holistically, not in isolated stages.
At Willow Private Finance, we work with over 50 development and bridging lenders, from boutique funds to major private banks. Our team understands how to package and sequence dual-phase finance for maximum efficiency.
We help clients avoid unnecessary refinancing costs, negotiate flexible covenants, and maintain lender confidence from acquisition through completion. Whether you’re a first-time developer or managing a £20 million GDV scheme, we’ll ensure your funding is structured seamlessly and strategically.
Q1: What is a bridging-to-development loan?
A: It’s a dual-phase facility that starts as a short-term bridge for acquisition and converts into development finance once conditions like planning approval are met.
Q2: What are the advantages of this structure?
A: It eliminates refinancing delays, saves on fees, and ensures funding continuity from purchase to completion.
Q3: What loan-to-cost (LTC) ratios are typical in 2025?
A: Most lenders offer up to 70–75% LTC, though experienced developers with strong exits can access higher leverage.
Q4: Can I refinance mid-project if costs rise?
A: Yes, but it’s often faster and cheaper to negotiate additional drawdowns or contingency funding with your existing lender.
Q5: How long does approval take?
A: Expect 3–6 weeks for bridging-to-development approval, depending on lender capacity and project complexity.
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About the Author
Wesley Ranger is the Director of Willow Private Finance with more than 20 years of experience in development and structured property finance. He specialises in bridging, development, and hybrid facilities, helping clients secure flexible funding that supports every stage of their projects in the UK and internationally.
Important Notice
This article is for general information purposes only and does not constitute personal financial advice. Loan availability, eligibility, and rates depend on your individual circumstances and may change without notice.
Always seek independent advice before entering into any financial arrangement.
Willow Private Finance Ltd is authorised and regulated by the Financial Conduct Authority (FCA No. 588422). Registered in England and Wales.
