Following a recent Building Insights podcast with Housebuilder & Developer editor James Parker, BuildStore Mortgage Services’ Tom McSherry explains the importance of transparency, tailored solutions, and early financial planning for bridging development finance.
Could you explain the difference between regulated and non-regulated finance for residential developments?
Regulated finance falls under the oversight of the Financial Conduct Authority (FCA) and typically applies where the loan is secured against a borrower’s home, or where they or their family will live in the property. The regulation is designed to protect consumers, with strict requirements around affordability checks, advice, and transparency.
Non-regulated finance, on the other hand, is generally used for commercial or investment purposes; for example, short-term bridging or development loans for projects which will be sold or rented out by a developer. These products are tailored to each project, but they don’t carry the same FCA protections.
What are developers’ key issues and questions they are asking you currently in terms of short-term bridging loans (for example, affordability and inflation)?
One of the biggest is cost. Short-term borrowing does come with higher interest rates compared to traditional loans. Developers also worry about tight timescales, since bridging loans are usually arranged quickly and need to be repaid within a short window, often linked to the sale or refinance of the property. In today’s market, there are added pressures around inflation and build cost overruns, which can make exit strategies feel less certain.
That said, bridging finance is designed to be a flexible problem-solver rather than a long-term burden. At BuildStore, we work with specialist lenders who understand the development market and can tailor terms to the project’s needs.
For example:
- Speed: Funds can often be released within weeks, helping developers secure opportunities that would otherwise be lost.
- Flexibility: Bridging can cover land acquisition, site costs, or even help refinance partway through a project if circumstances change.
- Exit planning: As an Independent Mortgage Specialist, we focus on aligning the bridging facility with a clear repayment route, whether that’s development finance, a stage-payment mortgage, buy to let or the eventual sale of the property.
By setting realistic budgets, preparing for contingencies, and ensuring that lenders are clear about the developer’s goals, bridging finance becomes a strategic tool rather than a risk. Our role is to guide developers through those challenges, structure the funding appropriately, and provide the reassurance that the finance supports, rather than hinders, the project’s success.
What support does BuildStore provide to developers or clients seeking short-term funding?
BuildStore helps developers by:
- Accessing specialist lenders: As independent advisors we have access to all of the lenders and products on the market. This allows us to ensure that the developer has access to the right solution every time.
- Tailoring solutions: Ensuring products match the borrower’s project size, timescale, and repayment strategy.
- Guidance & structuring: Helping clients present a strong case to lenders, covering budgets, valuations, and exit plans.
- Ongoing support: We’re not just about the loan approval; we stay engaged through drawdowns, build progress, and refinancing needs.
- Experience: With over 25 years in the self-build and development finance market, and more than 30,000 projects successfully delivered across the UK, BuildStore has unrivalled insight into the challenges and opportunities developers face. This depth of experience means we don’t just arrange funding, we anticipate potential hurdles, structure deals that work in practice, and provide developers and clients with the confidence that their project is backed by proven expertise.
Why is transparency important for developer customers?
Transparency builds trust. Developers want certainty about fees, rates, and conditions before they commit. By being upfront, BuildStore helps clients budget effectively and avoid unpleasant surprises; especially critical when profit margins on developments can be tight.
There’s a perception that bridging and development finance is expensive – is that really the case?
While the rates are higher than traditional long-term mortgages, that’s because these products are short-term and higher risk for lenders. But expensive is relative:
- If structured correctly, finance is just a project cost – factored into overall profitability.
- Competition among lenders has driven down costs in recent years.
- Speed and flexibility often outweigh the slightly higher interest rates when opportunities would otherwise be lost.
Do you need to have a certain level of income as a firm to qualify for development or bridging finance?
Unlike residential mortgages, development and bridging finance are assessed less on personal income and more on:
- project viability;
- experience of the borrower or team;
- strength of the exit strategy.
Even first-time developers can access finance if the project is well-structured and supported by professionals.
What if I have a history of adverse credit – does that rule me out?
Adverse credit doesn’t automatically exclude a borrower. Lenders will look at:
- How recent and severe the issues were;
- Evidence of recovery and current financial management;
- The overall project proposition and exit route.
BuildStore helps clients present their case so lenders can take a balanced view.
How does development finance fit into the custom-build end of things?
Custom build projects are unique because they require two distinct layers of funding. The first stage is development finance, which covers land acquisition, infrastructure, and site preparation – often delivered as serviced plots, “golden brick,” or shell schemes. At this stage, BuildStore works hand in hand with development lenders to structure funding that gives developers the capital and flexibility needed to bring sites to market.
Once the plots are ready, we manage the transition into the custom build stage-payment mortgage process, which finances the construction of each individual home for the buyer. By bridging these two funding stages, we can deliver a seamless handover: developers are able to service their sites with confidence, while buyers benefit from a proven mortgage route to complete their homes.
Crucially, BuildStore also establishes a dedicated lender panel for each custom build development. This ensures that, before a site goes live, a group of lenders is already in place and committed to supporting it. This joined-up approach not only reassures developers and buyers but also makes projects more attractive to lenders, de-risks delivery, and underpins financial viability from the first spade in the ground through to the finished home.
Tom McSherry is national business development manager at Buildstore
To listen to the full podcast and hear more about developers’ options for bridging and development finance, visit insights.netmagmedia.co.uk