Getting the structure right when using drawdown facilities in bridging

The wrong type of finance does not always cause problems from the get-go, but it usually catches up with the project in the end. From our experience, it might show as a funding delay just as work is due to start on site, or emerge later when an exit becomes harder than was first thought.

However it appears, the pattern is familiar, and what once looked like a clean run starts to feel a lot less certain than it did. More often than not, the issue can be traced back to a facility that was never designed around how the project would actually unfold, rather than any single decision taken later down the line. And yet, despite these risks, property activity has not slowed.

Bridging finance remains active as regional trends shape returns

The housing market is still moving, though not in one specific direction. According to the Office for National Statistics, average UK house prices stood at £271,000 in November 2025, marking a year-on-year rise of 2.5%.

But that national figure glosses over regional divergence. In the North and Midlands, property values have held up well, supported by more accessible entry points and steady demand, while London and parts of the South East are seeing a more cautious market, shaped by real affordability constraints that continue to influence both pricing and activity.

Despite those mixed conditions, bridging activity remains fairly buoyant. In the third quarter of 2025, completions totalled £2.5 billion, up nearly 10% on the previous quarter and more than 40% higher than the same period last year.

That level of activity points to continued demand from investors and developers using short-term funding to transact quickly and generate real value, but it also highlights how important it has become to choose a funding structure that reflects not just the deal at the point of completion, but the demands and timing of the project as it actually plays out.

When a single advance remains the most practical option

In cases where the property is already in usable condition and the client’s objective is straightforward, a single advance bridge often makes the most sense. These are the facilities that work well when the aim is to move fast, whether to secure a purchase or release equity against an existing asset, and they remain familiar to brokers because they involve fewer moving parts and a clear route to completion.

That said, speed should never be mistaken for suitability. While a single advance can work well for lower complexity scenarios, it can begin to feel restrictive as soon as a project involves funds being deployed over time, particularly where costs do not land evenly or timelines begin to stretch. When that happens, the structure of the facility becomes just as important as the speed with which it completes.

Drawdown facilities add control to projects in motion

When a client sets out to add value over the course of a project, a drawdown structure often proves to be the better suited route. This becomes particularly clear where funding is not required all at once, but in stages as costs arise and work progresses, sometimes unevenly, over a longer period than originally expected.

In these cases, drawdown facilities allow capital to be released in line with agreed milestones, rather than advanced in full from day one. That might involve a small number of staged releases for simpler works, or a more structured series of drawdowns where costs, sequencing and timelines are less predictable.

Because funds are drawn as needed, borrowers only pay interest on capital they have actually used, while lenders retain visibility over how the project is progressing. That, in turn, gives all parties more room to manage spend, timing and changes on site, particularly where plans evolve as work gets underway.

We are seeing lenders respond to this need for closer alignment between funding and delivery. At Alternative Bridging Corporation, recent changes to how residential development finance is structured have focused on simplifying facilities and bringing construction and exit funding into a single framework, reflecting how schemes tend to move from build to sale in practice rather than in theory. The intention is not to add complexity, but to reduce friction as projects progress, giving brokers and borrowers greater certainty around timing, cash flow and exit planning.

Why structure matters as much as the exit

The distinction between a single advance and a drawdown facility feeds directly into how a loan should be structured from the outset. The decision is rarely about just one factor. Rather, it requires a considered view of how the project is likely to unfold, what timescales are realistic once work is underway, and how the borrower intends to exit once the scheme is complete.

A straightforward project with limited change may only require a simple structure. But once funding needs to follow progress, or timing becomes less certain, a more flexible approach becomes essential.

Deals hold together when the finance is fit for purpose

In most cases, problems do not begin on day one. They tend to surface midway through the works or close to completion, often at the point when a refinance or sale needs to happen quickly and options begin to narrow. By then, it can be difficult to unwind a facility that was never structured around how the project would actually run.

That is precisely why the choice of structure matters so much at the outset. A facility that reflects how funds will be used, and how the project is likely to develop over time, provides the flexibility needed to deal with the things that were not in the original plan.