When Should You Choose a Bridging Loan Over a Development Loan?

 As previously mentioned, a development loan requires monthly repayments. These are based on how much you borrow, how long it will take to repay, and an agreed-upon interest rate (which is typically higher than other types of mortgages). Since there’s no way to know exactly how much you’ll end up borrowing, these loans rely heavily on estimates. 

The final amount you pay will depend on your project’s actual costs—if they come in under budget, then you won’t have to pay as much back. If they exceed your expectations, however, then your payments could increase dramatically. 

Bridging loans don’t require any repayments until after construction has been completed; at that point, all outstanding debts must be paid off within six months. This means you won’t have to worry about making monthly payments while your project is still in progress—but it also means you need to pay back a lump sum when it comes time to finish your project. 

The good news is that these loans are usually offered at a lower interest rate than development loans, which can help offset some of your other costs and keep you from taking on too much debt. The final decision on whether to get a bridging loan or development loan will depend largely on your personal situation. 

If you’re not able to make regular payments over an extended period of time, then you may want to consider getting a bridging loan instead. However, if you have cash flow issues and aren’t sure how long they might last, then getting a development loan could be more beneficial in the long run.