A Property Professional's Guide to Bridging Finance
Helping property investors, developers and business owners make better funding decisions, and helping the advisers who introduce them do the same.
Most clients open the conversation with a version of the same question, can we obtain funding for this? It is a reasonable place to start, and in almost every case the answer is yes. In my experience, however, it is rarely the most useful question.
The better question, the one that shapes whether a transaction serves the client well, is quieter and more demanding. Does this funding support what we are actually trying to achieve? A facility that solves a problem this month, but complicates the exit next year, is not a good facility. It is simply a fast one.
That is the discipline this guide is built around. Over the years I have come to hold one belief above all others in this work:
Every bridge should begin with a credible exit strategy.
This publication has been written for the professional advisers whose clients rely on their judgement, accountants, solicitors, planning consultants, auction houses and surveyors, and for the property investors, developers and business owners those advisers serve. It is intended to help you recognise the situations where bridging finance belongs, the situations where it does not, and the questions worth asking before a single application is made.
If it saves one client from the wrong facility, or gives one adviser the confidence to have a more useful conversation, it has done its work.
Darren Leigh
It is too often reduced to a single characteristic, that it is expensive short-term money. Used well, it is nothing of the sort. It is a strategic funding tool that enables transactions that would otherwise be impossible, protects value that would otherwise be lost, and buys the time that longer-term finance requires to be arranged properly.
The most important question is never "can we obtain a bridge?". Bridging is widely available. The first question, and the one that determines whether a facility should be arranged at all, is "what is the exit strategy?"
This guide has been written for the professionals whose clients rely on their judgement, accountants, solicitors, planning consultants, auction houses, surveyors and estate agents, and for the property investors, developers and business owners those advisers serve. It is not a sales document. It is an attempt to make one part of the funding landscape clearer.
Funding decisions should begin with the destination, not with the product.
Bridging finance is a short-term facility, typically arranged for three to twenty-four months, secured against property.
It exists because property transactions do not always align with the timetable of long-term lenders. A vendor cannot always wait twelve weeks. A refurbishment cannot be underwritten on a buy-to-let mortgage. A planning uplift cannot be captured on yesterday's valuation.
It works well where the exit is defined, credible and modelled. It works poorly where any of those three are absent. The interest rate is rarely the deciding factor; the discipline of the plan almost always is.
The interest rate is not the risk. The absence of a credible exit is.
Each is drawn from real transactions. Each begins the same way, by defining the exit before the facility.
Twenty-eight days from gavel to completion rarely aligns with a term lender's timetable. A bridge secures the asset; the term facility follows once the property is stabilised.
Refinance onto a commercial or buy-to-let mortgage post-completion.
Assets in poor condition are unmortgageable in their current state. A bridge funds acquisition and works; value is created before the exit is arranged.
Refinance on the uplifted value or sale of the completed asset.
Where a scheme is too small, too fast or too bespoke for a traditional development lender, a bridge with staged drawdowns keeps the programme moving.
Development exit finance, sale of units, or investment refinance.
A commercial mortgage typically takes eight to twelve weeks. A bridge protects the transaction where the vendor cannot wait.
Refinance onto a commercial investment or owner-occupier mortgage.
A short-term facility secured against existing equity can release working capital, fund a tax liability or complete a linked purchase.
Sale of another asset, refinance of the security, or business cashflow.
Where a sale is agreed but not yet completed, a bridge allows the onward purchase to proceed without renegotiation or loss of deposit.
Completion of the pending sale.
An asset acquired subject to planning can be funded and improved before the planning uplift is realised, timing is often everything.
Sale post-consent, development finance, or long-term refinance.
Where an existing facility matures before a longer-term solution is in place, a bridge provides orderly transition rather than forced sale.
Refinance on completion of longer-term underwriting.
The situation calls for the bridge. The exit determines whether the bridge should be arranged.
A facility is only arranged once all five have a clear and honest answer.
The exit is the foundation of every bridge. It is agreed before terms are requested, never after.
A sale price, a refinance valuation or a planning timetable must survive scrutiny. Optimism is not a strategy.
We model the cost of an extension and the impact on the exit. Contingency is priced in from day one.
Interest, arrangement, legal, valuation, exit and monitoring, every line item is transparent before commitment.
If the answer is not an unambiguous yes, the transaction is restructured or declined.
Good funding starts with good questions. If any of the five have a soft answer, the plan is not yet ready.
These are not stories about finance. They are stories about the decisions that came before it, and the judgement that shaped them.
A long-standing investor had built a substantial portfolio over two decades. It had grown organically, one asset at a time, across seven lenders on inconsistent terms. Maturities were staggered across four years, covenants no longer reflected current values, and the blended cost of capital had drifted well above market.
No single lender saw the full picture. Each facility looked reasonable in isolation; together they created concentration risk and refinance risk the client had never quantified.
Rather than approach the market immediately, we modelled three exit paths, a full institutional refinance, a phased consolidation, and a selective disposal of two under-performing assets. Each was stress-tested against a two-point rate rise and a soft rental market.
The portfolio was consolidated with a single institutional lender on aligned maturities and a materially reduced blended rate. The two weakest assets were released without disruption to the wider strategy.
A portfolio is only as strong as the refinance strategy that supports it. The right facility appeared only once the right question had been asked.
A developer acquired a Grade II listed church with permitted development consent for a residential conversion. The high-street lenders declined on principle; the specialist development lenders required a level of planning clarity the project did not yet have.
The scheme sat in a familiar gap, too complex for a term lender, too early for a development lender. Time was working against the acquisition price the client had negotiated.
We structured a bridging facility with staged drawdowns tied to planning milestones, so the client paid interest only on funds actively deployed. The exit, a development finance facility, was underwritten in parallel, with the terms agreed in principle before the bridge completed.
Full consent was secured on schedule, the scheme was delivered on budget, and the client refinanced onto the pre-agreed development exit facility with no delay to the programme.
Bridging on heritage and planning-led assets is a question of sequence. Get the order right, planning, cost, exit, and the funding becomes straightforward.
A family business faced three deadlines arriving in the same fortnight, a linked commercial purchase they had waited two years to complete, an unexpected corporation tax liability, and a sale that had slipped by six weeks. One balance sheet, three problems, none of them solvable in isolation.
The clearing bank would have taken twelve weeks to reunderwrite the trading facilities, and the client was not willing to renegotiate the purchase. The instinct was to borrow against the business; the better answer was elsewhere.
We sat at the kitchen table on a Sunday afternoon, mapped the cashflow week by week, and structured a single bridge against the property being sold. The trading facilities were left entirely untouched.
The purchase completed, HMRC was paid on time, and the pending sale redeemed the bridge in full within four months, comfortably inside the term.
The best funding decisions rarely begin with a product. They begin with an honest, unhurried conversation about the destination.
Three transactions, one thread, the strategy came before the product.
The majority of DGL Commercial Finance's work is introduced by professionals whose reputations rest on the quality of the referrals they make.
We work quietly, in the background, alongside accountants, solicitors, planning consultants, auction houses, surveyors and estate agents. The introducing adviser is kept informed at each stage and is never displaced from the client relationship.
Introductions are not chased. They are earned, by planning carefully, communicating clearly and declining transactions that do not serve the client well.
The best introductions are made once the exit strategy is understood, never before.
A relaxed fifteen-minute conversation. We discuss the funding options, the exit strategy, the risks that are worth naming and the next sensible step. Nothing more, nothing less.
Every successful funding journey starts with the right conversation.
Managing Director, DGL Commercial Finance