Commercial Bridging Finance

If your exit strategy is delayed — for example, the sale of the property takes longer than expected or your refinance application has not completed — most bridging lenders will consider an extension to the loan term. Extension terms and costs vary by lender: some charge the same monthly rate for the extension period, others increase the rate, and some charge an extension fee. It is critical to communicate with your lender and broker as soon as you know the exit may be delayed, rather than waiting until the term expires. Proactive communication typically results in more favourable extension terms. In the worst case, if the loan cannot be repaid and no extension is agreed, the lender may appoint a receiver and sell the property to recover their funds.

Commercial bridging loans on properties used solely for business or investment purposes are not regulated by the FCA — they fall outside the scope of consumer credit regulation. This means fewer prescribed consumer protections but also greater flexibility in lending criteria and speed of execution. However, if the property is or will be occupied as a residence by the borrower or a family member, the bridging loan may be regulated, requiring the broker to be FCA-authorised and providing additional protections including a cooling-off period. At Commercial Mortgage Broker, we work with both regulated and unregulated bridging lenders to ensure your transaction is handled appropriately through the correct regulatory channel.

The total cost depends on the loan amount, interest rate, term, and fee structure. As an illustration: a £500,000 commercial bridge at 0.85% per month with retained interest for 10 months, plus a 1.5% arrangement fee, would cost approximately £42,500 in interest and £7,500 in arrangement fees — a total finance cost of £50,000. Add valuation (£1,500-£3,000), lender legals (£2,000-£3,000), your solicitor's costs, and broker fees. While this is significantly more expensive than term lending on an annualised basis, the short duration means the absolute pound cost is manageable when viewed against the profit or strategic benefit of the underlying transaction.

Many commercial bridging lenders will consider borrowers with historic adverse credit, provided the overall deal fundamentals are strong. The key factors are the equity in the deal (lower LTVs provide greater comfort), the quality and credibility of the exit strategy, and the nature and age of the adverse credit. Recent defaults, active CCJs, or ongoing insolvency proceedings are more problematic than older, satisfied adverse markers. Expect to pay a higher interest rate and potentially a higher arrangement fee. Full transparency about your credit history from the outset is essential — lenders are far more likely to decline an application where adverse credit is discovered during due diligence than one where it is disclosed upfront with a clear explanation.

Decision in principle within 24-48 hours. Straightforward cases can complete in 5-7 working days; more complex cases involving multiple securities or unusual property types may take 2-3 weeks. Speed depends on documentation readiness, valuation turnaround, and legal complexity. Auction purchases routinely complete within 28 days.

Regulated bridging applies when the property is or will be occupied by you or a family member as a residence (FCA regulated, with consumer protections including a cooling-off period). Unregulated applies to pure investment or commercial properties with no personal occupation -- faster processing, more flexible criteria. At Commercial Mortgage Broker, we work with both regulated and unregulated bridging lenders to ensure your transaction is handled appropriately through the correct regulatory channel.

Yes, all lenders require a credible and evidenced exit strategy. Common exits include refinancing to a commercial mortgage, property sale after refurbishment, or confirmed funds from another source. Your exit must be realistic and achievable within the loan term. We help clients structure their exit strategy before the bridging application to ensure it withstands lender scrutiny.

Yes, refurbishment is one of the most common uses of commercial bridging. Lenders categorise works as light refurbishment (cosmetic) or heavy refurbishment (structural). Light refurb bridges advance based on post-works value. Heavy refurb bridges may release funds in stages as works progress. The lender will assess your experience, scope and cost of works, and projected end value.

If your exit strategy is delayed, most bridging lenders will consider an extension to the loan term. Extension terms and costs vary: some charge the same monthly rate, others increase the rate or charge an extension fee. Communicate with your lender and broker as soon as you know the exit may be delayed -- proactive communication typically results in more favourable extension terms.

Total cost depends on the loan amount, interest rate, term, and fee structure. As an illustration: a £500,000 commercial bridge at 0.85% per month with retained interest for 10 months, plus a 1.5% arrangement fee, would cost approximately £42,500 in interest and £7,500 in fees -- a total finance cost of £50,000. Add valuation, legal costs, and broker fees. While more expensive than term lending on an annualised basis, the short duration means the absolute cost is manageable when viewed against the profit on the transaction.