Why lenders focus on the exit
Bridging lenders aren't lending against your monthly income. They're lending against a property for a short time and need to know the loan will be repaid. A credible exit is the single biggest factor in getting a bridge approved on good terms.
Exit 1: Sale of the property
Common for auction flips, refurbishments and development. Lenders will want:
- A realistic sale price backed by comparable sales.
- A timeline that fits inside the term, with room for delays.
- For refurbishments, a works programme that finishes well before the term ends.
Exit 2: Refinance onto a buy-to-let mortgage
The most common exit for investors who buy, refurbish and let. Check before you start that you'll qualify:
- Rental cover: buy-to-let lenders test rent against the mortgage payment, often at 125% or more.
- Value: the post-works value needs to support the mortgage you need to repay the bridge.
- Ownership period: some mortgage lenders won't lend within six months of purchase. Others, including some on our panel, have no minimum period.
Exit 3: Commercial mortgage
For commercial and semi-commercial property, the exit is usually a commercial term loan. Lenders typically want rent or business profits to cover interest by at least 125%, and leases in place before they'll refinance.
Exit 4: Development exit, then sale
Developers often repay a development loan with a cheaper exit bridge, then repay that from unit sales. See developer exit finance.
Exit 5: Other assets
Sale of another property, business proceeds or an inheritance can all work, but the lender will want evidence that the money will really be there in time.
Plan B
Strong applications show a fallback: if the sale is slow, could you refinance? If the refinance falls short, could you sell? Having a Plan B makes lenders more comfortable, and protects you if the market moves.