When developers need fast capital, many choose bridging loan providers. But sometimes, they make mistakes that cost them time or money. These mistakes are not always easy to see at first. Developers must look deeper than only interest rates or quick approvals. Bridging finance is complex, and it needs careful planning to match the project needs.
One big mistake is choosing a loan that does not match the project’s real cash flow. Some loans have fixed drawdowns or fixed repayment terms. But in Construction Finance, things often do not go as planned. Delays from weather, labour shortage, or material problems can affect the work. If the loan is not flexible, then the developer might face problems with paying on time or asking for more funds when needed. This can stop the project or increase stress.
Another issue comes when developers only check the main interest rate but do not look at hidden charges. Many bridging loan providers have exit fees, admin charges, or early repayment penalties. These are not always visible when checking the offer. Over time, these extra fees can make the loan very expensive. Developers should ask for the full cost breakdown before they agree to anything.
With Part Complete Bridging Finance, the project is already part finished. Developers want to raise money to complete or stabilise the site. But some lenders do not understand how to deal with half-done builds. They may ask for more documents or slow the process down. If the lender does not understand how to value part-complete projects, they might undervalue it. This can reduce the amount the developer gets or cause delay in funding. Developers must find a lender who has experience with these kinds of loans.
Some developers also do not check who makes the real decisions in the lending company. Sometimes, even if the loan manager promises fast approval, they still must wait for someone higher to agree. This can waste time and cause the developer to miss deadlines. It is important to check if the lender has in-house decision makers or if they need third-party approval. When time is short, fast response is very important.
There is also a problem when the lender cannot accept special risks. Not all projects are the same. Some have different design ideas, complex builds, or planning issues. These may be good projects, but some lenders see them as high risk. If the lender cannot assess these types properly, they may say no or ask for tough terms. Developers should ask if the lender has funded similar projects before. This is important so the lender can understand the site value, the planning setup, or the exit options.
Many developers forget to think long term. A bridging loan solves a short-term need, but what if the developer has many sites or needs more funding later? Some lenders do not offer portfolio support or follow-on finance. Then the developer must start again with a new lender. This takes time and adds legal or valuation costs. It is better to find a lender who can grow with the developer’s business over time.
Mistakes Developers Make When Choosing Bridging Loan Providers
