The Real Cost of Slow Finance
In commercial property, time is money — and not in an abstract sense. A vendor who accepts a lower offer from a cash buyer because they need certainty, an auction lot you could not bid on because your mortgage was not ready, a below-market-value opportunity that another buyer snapped up while you waited for underwriting — these are real, quantifiable costs.
**Bridging finance** costs more in interest than traditional lending. That is beyond dispute. But the total cost of a transaction is not just the interest rate. It includes the cost of delay, the cost of lost opportunities, and the cost of uncertainty.
This article examines when the speed and certainty of bridging finance **justifies** the premium — and when traditional lending remains the better choice.
Understanding the Speed Advantage
The difference in completion timescales between bridging and traditional commercial lending is dramatic:
Bridging Finance Timescales
- Decision in Principle: Same day to 48 hours
- Valuation: 2 to 5 working days
- Legal work: 3 to 10 working days (often in parallel with valuation)
- Total: 3 to 15 working days from application to drawdown
Traditional Commercial Mortgage Timescales
- Decision in Principle: 1 to 2 weeks
- Full credit assessment: 2 to 4 weeks
- Valuation: 1 to 3 weeks (including instruction and report)
- Legal work: 3 to 6 weeks
- Total: 6 to 16 weeks from application to drawdown
That is a difference of potentially 3 months. In a competitive property market, 3 months is an eternity.
**Key Takeaway:** Bridging finance is not just "faster" — it operates on a fundamentally different timescale. Decisions that take weeks with traditional lenders take hours with bridge lenders. This speed creates opportunities that would otherwise be inaccessible.
Scenario 1: Auction Purchases
**The situation**: You have identified a commercial property at auction with a guide price 25% below market value. The auction terms require completion within 28 days.
**Why bridging wins**: No commercial mortgage can be arranged in 28 days. Without bridging, you simply cannot participate in the auction.
**The value calculation**:
- Property guide price: £300,000
- Estimated market value: £400,000
- Bridging cost over 6 months (while you arrange a mortgage): £15,000
- Net saving over market price: £85,000
The bridging cost is a fraction of the discount achieved by buying at auction. Without the bridge, you miss the opportunity entirely.
See our detailed guide on [bridging finance for auction purchases](/knowledge-hub/bridging-finance-auction-purchases).
Scenario 2: Vendor Demands Fast Completion
The situation: You are negotiating to buy a commercial property worth £600,000. The vendor has received two offers — yours at £580,000 with a 3-month completion, and a cash buyer offering £540,000 with completion in 2 weeks.
**Why bridging wins**: By arranging a bridge, you can complete in 2 weeks — matching the cash buyer's speed — while offering a significantly higher price. The vendor gets both speed and a better price.
**The value calculation**:
- Your offer with bridging: £580,000 (completing in 2 weeks)
- Cash buyer offer: £540,000
- Bridging cost over 3 months (before refinancing to a mortgage): £12,000
- Property acquired at £580,000 (£20,000 below market value)
- Without bridging, you lose the deal to the cash buyer entirely
Many vendors, particularly those under financial pressure, in probate, or in receivership, will accept a lower price for speed and certainty. Bridging lets you match cash buyers on speed while borrowing most of the purchase price.
Scenario 3: The Property Does Not Meet Mortgage Criteria
**The situation**: An office building is available for £250,000 but is in poor condition — no tenants, outdated electrics, leaking roof. No commercial mortgage lender will touch it in its current state. After £60,000 of refurbishment, it will be worth £400,000 and command £28,000 per annum in rent.
**Why bridging wins**: Traditional lenders cannot fund this purchase because the property does not meet their criteria. Bridging finance is designed exactly for this scenario — fund the acquisition and works, then refinance once the property is improved.
**The value calculation**:
- Purchase price: £250,000
- Refurbishment: £60,000
- Bridging cost over 9 months: £20,000
- Total investment: £330,000
- Post-works value: £400,000
- Equity created: £70,000
- Annual rental income: £28,000
- Commercial mortgage at 75% LTV: £300,000
- Cash returned on refinance: most of your initial investment
Without bridging, this deal is impossible. With it, you create £70,000 of equity and a strong income stream.
Read more about the [refurbish and refinance strategy](/knowledge-hub/bridging-finance-property-refurbishment).
Scenario 4: Chain Break
**The situation**: You are selling a commercial property for £500,000 and buying a new one for £650,000. Your buyer pulls out 10 days before your scheduled completion. The seller of the property you are buying will not wait — they have another interested party.
**Why bridging wins**: A second charge bridge against your existing property (or a first charge on the new one) provides the funds to complete your purchase independently. Your sale can happen later without jeopardising your purchase.
**The value calculation**:
- Bridging cost over 4 months: £14,000
- Cost of losing the purchase: Loss of deposit (if already exchanged), legal fees already incurred (£5,000 to £10,000), months of negotiation wasted, and the new property going to another buyer
- Net saving: tens of thousands in avoided losses, plus you keep the deal
Our guide on [chain break bridging](/knowledge-hub/bridging-loans-chain-breaks-commercial) covers this in detail.
Scenario 5: Competitive Bidding
**The situation**: A desirable commercial investment with strong tenant covenant is on the market at £1.2 million. Multiple parties are interested. The agent advises that the vendor will favour "proceedable" buyers — those who can demonstrate funding is in place and can complete quickly.
**Why bridging wins**: A DIP from a bridging lender takes hours and demonstrates immediate purchasing power. A DIP from a commercial mortgage lender takes 1 to 2 weeks. In a competitive situation, being the first buyer to demonstrate funding can secure the deal.
**The value calculation**:
- Being outbid or outpaced by a faster buyer: You lose the property
- Cost of bridging for 2 to 3 months while arranging a long-term mortgage: £20,000 to £30,000
- Value of securing the property: A strong commercial investment you hold for years
In competitive markets, bridging provides a negotiating advantage that cannot be replicated with traditional lending timescales.
When Traditional Lending Is the Better Choice
Bridging is not always the answer. Traditional commercial mortgages are the right choice when:
There Is No Time Pressure
If the vendor is relaxed about timescales and you are not competing with other buyers, a commercial mortgage saves thousands in bridging costs. There is no point paying a premium for speed you do not need.
The Property Meets Standard Criteria
If the property is in good condition, tenanted, and valued appropriately, a commercial mortgage can fund the purchase directly. The bridge is unnecessary.
You Want Long-Term Certainty
A 5-year fixed-rate commercial mortgage at 5% per annum provides predictable costs. Bridging provides speed but introduces refinance risk — you need to secure the long-term mortgage after the bridge, and there is no guarantee of terms.
The Numbers Do Not Work
If the bridging costs consume most or all of your profit margin, the deal may not be viable via a bridge. Always model the full cost before committing.
You Lack a Clear Exit Strategy
Bridging without a robust [exit strategy](/knowledge-hub/exit-strategy-bridging-finance) is dangerous. If you cannot clearly demonstrate how you will repay, traditional lending (with its longer term) is safer.
How to Calculate the True Value of Speed
When evaluating whether to use bridging, consider these factors:
The Opportunity Cost of Delay
What happens if you do not act quickly?
- Do you lose the deal? If yes, the cost of delay is the entire profit you would have made.
- Do you pay a higher price? Vendors offer discounts for speed. What is the difference between a "fast buyer" price and a "slow buyer" price?
- Do you lose negotiating leverage? In competitive situations, speed is a powerful negotiating tool.
The Cost of the Bridge
Calculate the total bridging cost including:
- Interest over the expected term
- Arrangement fee
- Valuation and legal fees
- Exit fee (if applicable)
Use our [bridging calculator](/calculators/bridging) for a quick estimate.
The Net Value Equation
**Net value of using bridging = (Value gained from speed) - (Total bridging cost)**
If the value gained exceeds the cost, bridging is the right choice. If not, wait for a mortgage.
**Key Takeaway:** Do not compare the bridging interest rate to the mortgage interest rate in isolation. Compare the total cost of the bridging route (including the refinance) to the total cost of missing the opportunity. The bridging rate is almost always irrelevant in this wider context.
The Certainty Premium
Beyond speed, bridging provides **certainty**. In a property transaction, certainty has tangible value:
- Vendor certainty: Sellers prefer buyers who can demonstrate funding. A DIP from a bridging lender is more credible than a mortgage DIP because bridging completions are faster and less likely to fail.
- Completion certainty: Bridging loans have fewer conditions and are less likely to be withdrawn late in the process compared to commercial mortgages, which can be pulled if the lender changes policy or identifies issues during extended underwriting.
- Personal certainty: You know the deal will happen. No sleepless nights wondering if the mortgage will be approved.
This certainty premium is difficult to quantify but is consistently valued by both buyers and sellers in the commercial property market.
Working With a Specialist Broker
The decision between bridging and traditional lending should be made with professional guidance. An experienced broker **provides**:
- Honest assessment: Whether bridging genuinely adds value in your situation, or whether patience and a commercial mortgage is the better path
- Cost modelling: Full analysis of both routes so you can make an informed decision
- Seamless execution: If bridging is right, your broker arranges both the bridge and the subsequent refinance, ensuring the exit is planned from day one
- Market knowledge: Which lenders are fastest, most competitive, and most likely to deliver
At Commercial Mortgages Broker, we arrange both [bridging finance](/services/commercial-bridging) and [commercial mortgages](/services/commercial-mortgages). We will give you an honest view of which route is best — and if bridging is the answer, we will make it happen quickly.
[Contact us](/contact) to discuss your situation.
Frequently Asked Questions
Is bridging finance always more expensive than a commercial mortgage?
On an annualised basis, yes — bridging rates are higher. But the total cost depends on how long you hold the bridge. A 3-month bridge at 0.75% per month costs 2.25% of the loan in interest. Over a short period, this can be a modest price for the speed and certainty it provides.
Can I arrange both the bridge and the mortgage at the same time?
Yes, and this is recommended. Your broker can arrange a DIP for the commercial mortgage alongside the bridging application, giving you confidence that the exit is in place before you commit to the bridge.
What if I cannot get a commercial mortgage to repay the bridge?
This is the primary risk of the bridge-then-refinance approach. Mitigate it by arranging a mortgage DIP before taking the bridge, and by having a secondary exit strategy (e.g., sale) as a fallback.
How do I know if a deal is worth the extra cost of bridging?
Model both scenarios: (1) total cost including bridging and then refinancing, versus (2) purchasing with a mortgage only. If scenario 2 means you lose the deal, the comparison is not about cost — it is about whether you get the property at all.
Do lenders view bridging negatively on future applications?
No. A bridging loan that is taken and repaid cleanly is a normal part of the property investment process. Lenders understand and expect investors to use bridging as a tool.
*Written by Matt Lenzie, Founder of Commercial Mortgages Broker. Ex-Lloyds Bank & Bank of Scotland.*