Bridging loan vs Commercial mortgage
Both are secured on property, but they solve different problems. A bridge buys time. A commercial mortgage buys a long term hold. Using a bridge where a mortgage would have worked is expensive, and using a mortgage timetable where speed matters loses the deal.
| Criterion | Bridging loan | Commercial mortgage |
|---|---|---|
| Time to completion | 5 to 20 working days | 6 to 12 weeks |
| Term | 3 to 24 months | 5 to 25 years |
| Cost | Monthly rate plus arrangement and exit fees | Margin over reference rate |
| Repayment | Interest rolled or retained, capital at exit | Amortising or interest only with a balloon |
| Exit requirement | A defined sale or refinance is mandatory | Trading cash or rental income services the debt |
| Condition of asset | Vacant, unmortgageable or under works accepted | Must be lettable or owner occupied and in good order |
Bridging lenders underwrite the exit before the asset. A signed sale, an agreed refinance offer or a clear planning position makes a bridge straightforward. Without a credible exit, the facility becomes a problem twelve months later at a much higher cost.
Commercial mortgage lenders underwrite income instead, whether that is rent from tenants or the trading profit of an owner occupier.
Auction purchases, chain breaks, buying an asset a term lender will not touch until works complete, and closing before a deadline that would otherwise cost more than the interest. In each case the premium buys a commercial outcome that a slower facility would forfeit.
The most common failure is assuming the term lender will be ready when the bridge matures. Start the refinance application at the same time as the bridge, not three months before expiry, and confirm the exit lender's valuation basis early.
Take a bridge only where speed or asset condition rules out a term facility, and only with a documented exit. Otherwise the commercial mortgage is materially cheaper.
Some lenders offer a bridge to term product where the same funder refinances on completion of works, which removes refinance risk and usually reduces total cost.
Bridging commonly reaches sixty five to seventy five per cent of value, commercial mortgages sixty to seventy five per cent depending on asset type and covenant strength.
Yes, and where a bridge is required we structure the exit at the same time, with no upfront fees.
Not sure which route fits? Describe the requirement once and we will structure it and approach the providers whose criteria match. No upfront fees — charges are due only once funding is in place.
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