The Intermediary – October 2026 - Flipbook - Page 46
BRIDGING
Opinion
Bridging in a slower
sales market
B
ridging finance can
be a genuine lifeline
in a slower market,
but only where the
exit is realistic, fully
understood and
properly stress-tested from the outset.
Longer transaction times are
making bridging finance more
relevant, because its core purpose
is to deliver speed and certainty
where conventional term finance is
not suitable or cannot be completed
quickly enough.
Bridging can be a real lifeline when
a client is commied to an onward
purchase, but their own sale is
delayed, or their buyer withdraws.
We are seeing more of this in the
current market, particularly in
regulated bridging.
A well-structured bridge gives
the client time to sell without
that is difficult to reconcile with a
genuinely urgent transaction. That
can mean the client incurs extra
refinancing costs or, in the worst
cases, loses an auction purchase.
The right facility is therefore not
simply the cheapest headline rate;
it is one that can deliver within the
required timescale. In today’s market,
a lender’s extension policy is as
important as its headline rate.
The strongest lenders underwrite
the exit sensibly from the beginning,
communicate early and take
a pragmatic approach when a
fundamentally sound case needs
more time.
Exit strategies
The exit must be treated as seriously
as the initial loan. For a sale-based
exit, brokers should sense-check
the valuation, demand, marketing
In case of emergency: An over-optimistic exit strategy can be the downfall of good bridging
automatically losing the property
they want to buy. It is also vital for
credible auction purchases, where
the completion timetable is fixed,
and conventional lending may not
be practical.
However, the market needs to
recognise that a bridge should not
become a mortgage process in disguise.
Some lenders, oen at the lower end
of the rate spectrum, can apply a level
of underwriting and documentation
44
The Intermediary | October 2026
strategy and likely sale period. The
numbers should work not only at an
optimistic value, but also at a sensible
90- or 180-day sale value.
For a refinance exit, we would
effectively run an agreement-inprinciple (AIP) exercise before
completion: reviewing affordability,
credit profile, lender appetite, the
property type, rental coverage where
relevant and the likely end value. A
sale may be the intended exit, but
GAURAV LADHAR
is managing director at
Landmark Specialist Finance
a viable refinance route is oen an
essential contingency.
In a slower market, clients may need
to carry their existing home and their
onward purchase simultaneously for
longer than planned. The affordability
assessment should include all
mortgage payments, bridge interest,
insurance, council tax, utilities and
any rental shortfall. The key question
is how long the client can comfortably
sustain both properties without
relying on an immediate sale.
Delayed sales can quickly consume
contingency once interest, extension
fees and holding costs continue beyond
the original plan. A down-valuation
can restrict refinance options and
affect the client’s ability to repay
the bridge. These risks do not make
bridging inappropriate; they make an
over-optimistic exit dangerous.
The facility needs enough time
to reflect realistic marketing,
conveyancing and refinance
timescales. Every case should have
a credible Plan B, whether that is a
refinance route, a price-reduction
strategy, additional liquidity or
an alternative asset sale. Building
contingency in from day one is far
beer than seeking it under pressure
shortly before maturity.
Brokers should provide a clear totalcost illustration covering interest,
lender and broker fees, legal costs,
valuation, monitoring fees where
applicable, exit fees and possible
extension costs.
Clients also must understand
default interest and the risks to
secured assets before they commit, not
as an aerthought at completion. A
wrien summary of the exit strategy,
the assumptions and the contingency
plan helps ensure the client is making
a properly informed decision. ●
