The Intermediary – February 2026 - Flipbook - Page 32
BRIDGING
Opinion
What underwriters
are really
looking for
I
n 2026, bridging finance is still
doing what it has always done
best: stepping in when time
maers. That core purpose
hasn’t changed. What has
changed, however, is the level
of scrutiny around whether a deal
can actually be executed cleanly and
repaid within the agreed term.
Volumes across the market remain
high, which is broadly positive for
brokers and borrowers alike. Liquidity
is there, appetite exists, and bridging
continues to play a central role in
transactions that simply don’t fit the
pace of mainstream lending.
But higher volumes also bring a
wider spread of deal quality. Alongside
strong, well-structured cases, lenders
The aim is not to say
‘no’ more often. It’s to say
‘yes’ to deals that have a
clear route to redemption”
are seeing more borderline cases. In
reality, the difference between an
approved deal and a declined one is
rarely speed alone. It comes down
to clarity, evidence, and a realistic
assessment of risk.
Fair pricing
Pricing is an obvious place where this
tension shows up. With Bank Rate
siing at 3.75%, funding costs still
influence pricing across the market.
From an underwriting perspective, the
key question is not whether a deal can
be priced, but whether that pricing
genuinely reflects the risk and the
timeframe involved. We look closely
at how long the borrower actually
needs the funds, how complex the
30
The Intermediary | February 2026
JULIE MEEHAN
is underwriting manager
at Mercantile Trust
works or planning position is and how
credible the proposed exit looks today.
Price shouldn’t be used as a tool to
gloss over uncertainty. If timelines are
tight, exits are ambitious, or the asset
itself is harder to trade, that risk needs
to be addressed in the structure of the
deal, rather than assumed away.
the case, the key question is whether
the journey from day one to that
end value is genuinely achievable
within the term and within the
borrower’s control.
Exit risk
Better outcomes
Exit strategy remains the fulcrum of
most bridging decisions, and while
the wider mortgage market has eased
compared to previous years, that does
not eliminate exit risk. Refinance
routes are more achievable than they
were, but they still need to stand up
to scrutiny.
In 2026, exit assessments are more
detailed and forensic. Refinance
exits need realistic rental coverage,
sensible pay-rate assumptions, and
evidence that a suitable term product
exists. Sale exits are tested against
local demand, comparable sales,
and whether the property will be
mortgageable in its current and end
condition. What underwriters are
looking for is not the mere presence of
an exit on paper, but confidence that it
will complete within the term agreed.
Valuation risk, in this environment,
is less about inflated figures and
more about misaligned expectations.
High deal flow means valuers are
generally grounded in the market, but
problems arise when assumptions run
ahead of reality.
The condition of the property
has to support the proposed loan
basis. Gross-development-value
(GDV) needs to be backed by real,
relevant comparables rather than
optimistic projections. Time and cost
contingencies have to be sensible,
particularly where refurbishment
or change of use is central to the
strategy. Where upli forms part of
As the market has become faster and
more competitive, the quality of the
borrower has taken on even greater
importance. Experience maers,
particularly when the deal involves
complexity. Adequate liquidity buffers
maer because unexpected delays are
the rule rather than the exception.
Clear and consistent documentation
maers, not as a box-ticking exercise,
but as evidence that the borrower
understands their own project.
Well-presented cases, with deposits
evidenced, works budgets supported
by contractor quotes, planning
positions clearly explained, and
exits properly substantiated, tend to
redeem on time.
Poorly evidenced cases are far
more likely to dri into extensions
and negotiations that could have
been avoided.
From a lender’s perspective, saying
‘yes’ in 2026 is not about lowering
standards or becoming more cautious
for the sake of it. The strongest
bridging cases share common traits:
they are realistic on timeframes,
clear and well evidenced on exits,
sensible on value and upli, and led
by borrowers who can demonstrate
genuine control over the outcome.
The aim is not to say ‘no’ more oen.
It’s to say ‘yes’ to deals that have a
clear, repeatable route to redemption,
without relying on hope, favourable
market shis, or rolling extensions to
get them over the line. ●
