When each option usually fits
When Bridging finance usually fits
- Signal
- — You need to complete in days or weeks, not months — auctions, chain breaks, distressed sales.
- Signal
- — The property is not currently mortgageable as-is and needs refurbishment before refinancing.
- Signal
- — You have a clear, evidenced exit within twenty-four months — sale, refinance or development.
- Signal
- — Speed and certainty matter more than headline rate.
When Commercial mortgage usually fits
- Signal
- — You are buying premises to occupy or hold as a long-term investment.
- Signal
- — The property is already in lettable or operational condition.
- Signal
- — You can document affordability through trading accounts or rental income.
- Signal
- — You can wait six to twelve weeks for offer, valuation and legal work.
Side-by-side comparison
| Dimension | Bridging finance | Commercial mortgage |
|---|---|---|
| Typical term | Three to twenty-four months | Five to twenty-five years |
| Pricing | Monthly rate, often 0.55% to 1.25% per month | Annual rate, typically a margin over Bank Rate or SONIA |
| Exit strategy | Mandatory and underwritten — sale or refinance | Affordability over the loan term is the test |
| Typical LTV | Up to 70-75% of value, sometimes higher with cross-charge | Up to 75% owner-occupied; 65-70% investment |
| Speed to drawdown | Often two to four weeks; faster on auction cases | Six to twelve weeks for offer and completion |
| Repayment | Interest rolled, serviced or retained; capital at exit | Monthly capital and interest, or interest-only with capital at term |
| Property condition | Non-mortgageable and refurb projects accepted | Must meet lender's standard condition criteria |
| Use cases | Auctions, chain breaks, refurb, change of use, light development | Owner-occupier premises, buy-to-let portfolios, investment property |
| Fees | Arrangement, valuation, legal, exit and broker fees | Arrangement, valuation, legal and broker fees |
| Regulation | Regulated only if borrower or family will occupy as a home | Owner-occupier commercial mortgages are unregulated business finance |
Shared considerations
- Both are secured by a first or second legal charge over UK property.
- Both need a valuation, legal due diligence and lender appetite for the asset.
- Both will look at the borrower's credit profile and source of deposit or equity.
- Always model the total cost of the route, including exit, not just the headline rate.
Frequently asked questions
- Can I use bridging instead of a commercial mortgage to save time?
- You can, but the monthly rate is much higher and the exit must be credible. Most borrowers use bridging only when timing or property condition rules out a mortgage at outset, and refinance onto a commercial mortgage as soon as the asset qualifies.
- What counts as a valid exit on a bridging loan?
- Typically a sale of the property, refinance onto a term mortgage, or sale of another asset. Lenders want documentary evidence — a draft sale agreement, an agreement-in-principle from a mortgage lender, or a clear development sales plan.
- How much deposit do I need for a commercial mortgage?
- Most UK commercial mortgage lenders want 25% to 35% equity in the deal. Owner-occupiers with strong trading accounts can sometimes go higher; investment loans tend to need more equity.
- Is bridging always more expensive?
- Per month, yes. Over the life of the deal, not always: a six-month bridge that unlocks a discounted purchase or a value-add refurb can leave you ahead, even after fees. Always model the all-in cost of both routes.