Why exits fail
- A sale takes longer, or achieves less, than expected
- A refinance is declined, delayed or offers less than needed
- Works overrun on time or cost
- Planning or building control sign-off is delayed
- Personal or business circumstances change
Many of these can be anticipated. A term with headroom and a fallback exit reduce the risk; see bridging exit strategies.
What happens at the end date
When the term expires unpaid, the loan is in default. Typical consequences in the loan terms include:
- Default interest, at a rate well above the standard rate
- Administration and legal fees
- Extension fees, if an extension is agreed
- A requirement to provide a plan and evidence of progress
These costs build quickly and reduce the equity left in the property, which can make refinancing harder.
Your options
- Extension with the existing lender, often with a fee and an updated valuation; see can you extend a bridging loan
- Refinance onto another bridge, if there is enough equity and a credible exit
- Refinance onto a mortgage or development exit loan, if the property now qualifies
- Sale at a realistic price, or sale of another asset
- Partial repayment, reducing the balance and the lender's risk
A refinance takes time, so start comparing options several months before the end date, not in the last few weeks. You can see indicative terms on Instant Quotes.
Enforcement
If no solution is agreed, lenders can enforce their security. On non-regulated loans, this often means appointing a receiver, commonly a Law of Property Act receiver, who can collect rents and sell the property. On regulated loans, lenders must follow the FCA's rules on treating borrowers in difficulty fairly before seeking possession, and the Financial Ombudsman Service can consider complaints.
Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Personal guarantees can also be called; see personal guarantees explained.
Act early
Lenders generally prefer to be repaid than to enforce. A borrower who explains the problem early, with a realistic plan and evidence, is in a much stronger position than one who goes quiet. If you are worried about repayment, take independent advice. Free, impartial debt guidance is also available from MoneyHelper.
Preventing a failed exit
- Choose a term that covers the exit plus a realistic margin for delay
- Evidence the exit before borrowing, for example with a mortgage agreement in principle or agents' advice on price
- Keep a fallback exit in mind, such as letting rather than selling
- Monitor progress against your plan each month, not only near the end
- Speak to the lender as soon as it is clear the date is at risk
- Start comparing refinance options at least three to four months before the end date
Most failed exits are delayed exits rather than impossible ones. Acting early turns a potential default into a planned extension or refinance, which is cheaper and far less stressful.
Common questions
Will I lose my property if I cannot repay a bridging loan?
It can happen as a last resort. Lenders usually prefer an extension, refinance or managed sale, especially if you raise the problem early.
What is default interest?
A higher rate charged once the loan is overdue. It increases the debt quickly, which is why acting before the end date matters.
Can I refinance a bridging loan with another bridge?
Often, if there is enough equity and a credible exit. Allow time, as a refinance needs a new valuation and legal work.
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.
