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With the Labour government set to overhaul planning regulations in order to pave the way for delivery on its ambitious housing targets, property development is expected to accelerate over the coming months and years. With this, developer demand for flexible short-term property finance is going to increase. As such, Excellion Capital,  the boutique debt advisory and investment firm, has released a comprehensive expert analysis of the UK’s bridging loan market—offering clarity for investors seeking the right funding solution for their specific needs.

What is a bridging loan?

Bridging loans are a valuable tool for property investors and developers who need fast, temporary access to capital. They are short-term loans used to bridge the gap between two financial transactions. Example uses include purchasing one property before selling another, or funding the refurbishment of a property in order to then sell it.

But selecting the right bridging product is essential because loan types differ significantly based on property use, borrower profile, and a lender’s tolerance for risk. Below, Excellion Capital outlines the the products available to investors depending on their precise requirements,

1. Bridge to Let

A bridge-to-let loan is designed for property investors or landlords who intend to refinance onto a buy-to-let (BTL) mortgage once certain conditions are met. Initial bridging finance is provided to allow the investor to purchase a property quickly – often one that wouldn’t qualify for a traditional BTL mortgage at the outset..

Once the property is renovated, let, or meets lending criteria, the borrower can transition to a long-term buy-to-let mortgage. As such, the exit strategy from the bridging loan is the BTL mortgage refinance, rather than a sale of the property.

The key benefits is the ability for investors to quickly unlock future rental income potential

2. Bridge to Development

Ideal when an investor needs to secure land or property prior to obtaining full development finance. It effectively bridges the gap between acquisition and development, thus giving developers time to arrange planning permission, detailed costs, and satisfy lender requirements for full development funding.

Such loans are intended to work on a short timeline of 3-12 months, are secured against the site or property, and the exit usually comes via development finance.

3. Second Charge Equity Release

A second charge bridging loan is taken out when an existing primary loan, such as a mortgage,  already exists on an asset. It is secured against the existing equity in a property, and the lender takes second priority behind the senior, or primary, lender when it comes to repayment. This type of loan allows property owners to unlock equity without selling the asset, remortgaging, or interfering with their primary loan. This equity can be used to finance another acquisition.  However, it is important that the senior lender agrees to the loan.

4. Development Exit Bridge

Designed to enable property developers to exit development finance once a project has reached practical completion but before the property has been sold or let. Usually more affordable than full development finance, in essence it gives the developer time to market the completed property and thus make their full exit or start generating income against which they can take out further, more suitable financing.

5. Refurb Bridge

Used to finance property renovations – either light (non-structural upgrades such as kitchens or bathrooms) or heavy refurbishment (structural work, extensions, or change of use) – and enable investors to add value to and reposition assets for resale  or refinance. Lenders don’t usually have to monitor Refurb loans too closely.  Essentially, these loans enable an investor to increase the value or mortgageability of an asset before seeking further financing or, of course, selling.

6. Acquisition Bridge

Used to acquire a property quickly with the intention of moving onto long-term investment finance (such as a buy-to-let or commercial investment mortgage) once it has better mortgageability or is ready to be let.

Such a loan is ideal for investors, landlords, and commercial buyers who need speed or flexibility at the point of purchase but then plan exit onto investment finance which will enable them to keep the property for rental income or other forms of long-term income.

7. Auction Finance Bridge

When a property is purchased at auction, the buyer typically has 28 days with which to pay the agreed price. Auction finance bridging loans are specifically designed to help buyers honour this tight deadline which can otherwise be impractical through a more  traditional mortgage. The loan is usually repaid through the mortgage eventually gained.

Robert Sadler, Vice President of Real Estate at Excellion Capital, commented:

“With planning reform on the horizon and demand for new housing set to rise, developers are increasingly seeking flexible funding options that match the pace and complexity of their projects. Bridging finance is not one-size-fits-all. The key to successful property investment lies in choosing the right loan structure to match your objectives. In terms of pricing, investors can expect rates starting at 0.70% per month and up to 0.80% LTV. At Excellion Capital, we work closely with our clients to understand the nuances of each deal—whether that’s securing land pre-planning, funding a heavy refurbishment, or bridging to a long-term investment loan. Each bridging product serves a specific purpose, and selecting the wrong one can compromise timelines, profitability, or refinancing potential. Our role is to cut through the complexity and structure the most efficient, cost-effective solution—ensuring that our clients move quickly without sacrificing strategic foresight.”

For more information on Excellion Capital click here.

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Neil Leitch, Managing Director of Development Finance, Hampshire Trust Bank explains why SME developers should be taking a closer look at revolving credit facilities

With the new government reaffirming its ambition to deliver 1.5 million homes during this parliament, all eyes are on how that target can be achieved.

While planning reform may help, the delivery of those homes will depend on developers bringing forward the schemes – and that increasingly means SME developers.

SME developers are central to future housing delivery. Whether it’s unlocking brownfield sites, progressing complex land, or building in areas of genuine local demand, they are the ones leading the way. But as developers scale their operations, the question is whether their funding approach is still fit for purpose.

The challenge with project-by-project funding

Traditional development finance has worked for many years. It provides clarity, control, and a predictable funding structure. However, for developers managing several sites or aiming to scale their operations, securing finance for each new project individually can become a bottleneck.

Each project requires revisiting the entire cycle of securing finance: legal agreements, valuations, due diligence, and credit processes. This takes up valuable time and slows progress, particularly when faced with rising construction costs and common planning delays. There is a lot of merit in an SME developer having the certainty of a fully funded facility but as they grow, they are less likely to want to fund and build an increasing number of houses, without having some certainty on sales. Once that view is taken, revolving credit facilities (RCFs) become an increasingly attractive option.

How a revolving credit facility can help

An RCF is a flexible, pre-arranged funding line that developers can draw from as needed and repay as they progress with their projects. While traditionally seen as a tool for larger corporations, RCFs are becoming more common in the large SME and small corporate development space.

Instead of applying for separate loans for each site, developers can use a single, tailored facility that provides the flexibility to support multiple projects. The developer only pays interest on the funds drawn, rather than the entire facility, helping improve cash flow management and reducing administrative burden.

It also allows developers to respond quickly to new opportunities. Sites can be progressed without waiting for a new facility to be arranged, helping maintain momentum across the business.

For example, HTB recently structured a £25 million revolving credit facility for a regional developer building over 240 homes across Yorkshire and Lincolnshire. The developer was managing sites at different stages with varied tenures and completion timelines. The facility was structured to provide phased drawdowns aligned with their build schedules, ensuring funding was available precisely when it was needed, without delay. This streamlined approach not only sped up their project timelines but also reduced the time spent on securing new funding for each scheme.

When it’s a good fit

Revolving facilities are ideal for developers managing multiple live projects or those with a defined pipeline of sites. The facility must be structured to reflect how the business operates.

A key consideration is whether project timelines and cash flows are predictable. For developers managing several live projects, each with its own set of requirements, a revolving facility can provide much-needed flexibility. This type of facility is perfect for developers taking on new opportunities and needing capital at different stages of each project.

However, an RCF is not a one-size-fits-all solution. For smaller developers or those working with longer gaps between projects, more traditional finance might still be the better option. Understanding your pipeline, capital needs, and how funds will flow across projects is essential when considering an RCF.

These facilities must be structured properly. Drawdown schedules, repayments, and facility terms must be tailored to the developer’s business model, ensuring alignment with construction schedules, cash flow, and project milestones.

The importance of the developer-lender relationship

For an RCF to be effective, it’s crucial to work with a lender who understands the specifics of development finance and can tailor the facility to the unique needs of the developer. An RCF isn’t simply a financial product – it’s a tool to support long-term business growth.

At HTB, we take a relationship-driven approach, working closely with developers to structure revolving credit facilities that align with their business model and future growth ambitions. By partnering with a lender who truly understands how a developer works, it’s possible to create a facility that is customised to the developer’s needs – ensuring it’s not only effective but also easy to manage.

Unlocking your potential for growth

As developers look to scale, managing multiple projects without the burden of applying for separate loans each time becomes a key advantage. An RCF provides a flexible, efficient solution to support growth, allowing developers to fund progress without the added complexity of traditional finance.

For developers with a strong pipeline and track record, an RCF offers the flexibility needed to maintain momentum, adjust quickly to changes, and grow the business at pace. With the right lender, RCFs are not just a financing tool – they are a way to help you scale confidently and efficiently, reducing the burden of administrative tasks and ensuring that your capital is used where it’s needed most.

For more information on development finance visit Development Finance | Hampshire Trust Bank (HTB).

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Customers of MSP Capital can access development exit bridging loans from just 0.8% per month, its lowest rate since 2022, under a ring-fenced £50 million funding allocation.

The pot, part of the fixed-rate lender’s current funding structure, is aimed at developers keen to access a more affordable and competitive bridging rate as they complete projects and move to the next.

There are no exit fees and borrowers can unlock up to 70% LTV on loan periods of four, six and nine months, with extensions available up to a full term of 15 months.

Adam Tovey, MSP Capital’s Director of Risk and Underwriting, said the allocation would support greater diversity in the funding of residential schemes, especially in the firm’s south of England heartlands.

RIGHT TIME FOR LOWER RATE. Adam Tovey, MSP Capital’s Director of Risk and Underwriting.

Adam, who joined the company in 2010 and leads a team accountable for all lending and credit risk, said: “We strongly believe the time is right for a lower rate for our Development Exit product.

“The Bank of England Base Rate has held at 5.25%, the general election is imminent and homes on the market have grown faster than sales agreed across England.

“Noting this, we wanted to give our clients the benefit of more time and financial flexibility.

“We’ve ring-fenced these funds to support our developer customers with a specific Development Exit Bridging Loan that provides them with flexibility to wait for sales and options for capital release for future projects.

“Whilst sales can still be slower in the current market, it shows shoots of improvement and we are keen to provide the support with the right funding solutions for our clients.

“It’s a time-limited offer designed to give developers more breathing space and flexibility as they wait for a finished scheme to sell.

“It means you can reset the clock, refinancing a development loan on to a more competitive bridge secure in the knowledge that as you source your next project, your current one is supported financially.

“We believe this will be highly attractive for those seeking that all-important competitive advantage as they await the right buyer and move on.

“It’s a cost-effective way to benefit from our more than 40 years’ experience and like-minded understanding of the property market.

“Starting at just 0.8% per month, our lowest for two years, the rate will help borrowers’ confidence, boost their profit margins and keeping them building homes.

“We encourage prospective borrowers to talk to us early. As there is a limited time offer on this pot, once it’s gone, it’s gone.”

The allocation applies to recently completed, new-build residential properties at practical completion. Individual properties must be under £1.5m in value, with a maximum total loan of £5m. Properties must be vacant and ready to sell.

For more details on lending criteria, visit Development Exit Bridging Loan – MSP Capital. For more information on MSP Capital, visit www.mspcapital.co.uk, email info@mspcapital.co.uk or call 01202 743400.

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