An interest-deferred bridge is a type of structured bridging loan in which interest payments are rolled up rather than serviced monthly. Common in UK property development finance, this structure improves short-term cash flow by allowing developers to allocate capital to early-stage project costs instead of interest payments. The accrued interest is added to the loan balance and repaid in full, along with the principal, at the end of the term—usually on sale, refinance, or project completion. It is particularly useful where early-stage income is limited or exit certainty is high.
An Interest-Deferred Bridge sits within Structured Bridge Loan structures and refers to a bridging facility where interest is not serviced monthly but rolled up into the facility balance, preserving early-stage cash flow for development works. This mechanism is typically used where income generation is delayed and exit visibility is strong, allowing capital to be prioritised toward acquisition, planning, or construction. It is often assessed alongside comparable structures such as Split-Tranche Bridge, which similarly adjusts drawdown and risk timing. Governance and draw conditions may be influenced by legal safeguards including No Default Certificate, while performance monitoring frequently references metrics such as Covenant Headroom, indicating headroom against agreed financial covenants.
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