Why refinance works as an exit
Bridging lends on property that a mortgage lender will not yet accept, or on a timescale it cannot meet. Once the works are complete, a tenant is in place or the purchase deadline has passed, the property can move onto cheaper long-term finance. The mortgage repays the bridge in full. See bridging exit strategies.
Buy-to-let refinance
Buy-to-let lenders lend on residential property let to tenants. They look at:
- Loan to value, commonly up to around 75%
- Rental cover: the expected rent must exceed the mortgage interest at a stressed rate by a set margin
- The property's condition and that it has a working kitchen and bathroom
- Your experience and portfolio, especially for HMOs or multi-unit blocks
- Whether you are buying in your own name or through a company
Rental cover often limits the loan more than loan to value does, so check it early. Some bridging lenders offer a bridge to let product with a linked buy-to-let exit.
Commercial mortgage refinance
Commercial mortgages fund offices, shops, industrial units, mixed-use buildings and trading businesses. Lenders assess the property, the lease and tenant strength for investment property, or the business's trading accounts for owner-occupied premises. Loan to value is usually lower than for residential property, and terms are often shorter. See commercial bridging loans and semi-commercial bridging.
Timing and ownership rules
Some mortgage lenders will not lend on a property owned for less than six months, or will base the loan on the purchase price rather than the new value during that period. Others will lend sooner, particularly where works have added value and the valuer supports it. Match your bridge term to the lenders you expect to use, and allow time for a mortgage application, valuation and legal work, often six to ten weeks.
Avoiding a shortfall
The bridge balance at exit includes rolled-up interest and fees. If the mortgage valuation or rental cover supports less than that balance, you need to cover the gap. To reduce the risk:
- Get a mortgage agreement in principle before or early in the bridge
- Use conservative valuations and rents, supported by local evidence
- Keep the bridge loan to value low enough to leave room
- Apply for the mortgage as soon as the property qualifies
- Have a fallback, such as a sale, if the refinance falls short
If the refinance is delayed, talk to the bridging lender before the end date; see can you extend a bridging loan.
Regulated cases
If you or a close family member will live in the property, both the bridge and the mortgage are likely to be regulated, with affordability checks based on your income. We will tell you at the outset how your case will be handled. Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
To compare bridging lenders with your refinance in mind, use Instant Quotes and apply online, and model costs on our bridging calculator.
Common questions
How soon can I refinance a bridging loan onto a mortgage?
As soon as the property and your circumstances meet the mortgage lender's criteria. Some lenders require six months of ownership, while others lend sooner.
What is rental cover?
A test that the expected rent exceeds the mortgage interest at a stressed rate by a set margin. It often limits how much a buy-to-let lender will lend.
What if the mortgage does not cover the bridge?
You need to make up the difference from savings, a partial sale or other funds, or extend or refinance the bridge while you resolve it.
Can I refinance a commercial property bridge onto a commercial mortgage?
Yes. Lenders look at the property, the lease and tenant, or the trading business for owner-occupied premises.
This guide is for general information only and should not be treated as legal, tax or financial advice. Lender requirements depend on the property and your circumstances.
