A property investor took a 12 month bridging loan planning to sell after light refurbishment. Six months in, the property was beautifully refurbished but the local market had softened. Properties were taking 4 to 6 months to sell, not the 6 to 8 weeks he'd assumed.
His original exit strategy was failing. We helped him pivot: he refinanced onto a buy to let mortgage, rented the property for 18 months while the market recovered, then sold at a 15% higher price than he could have achieved in the weak market. The pivot saved him approximately £40,000.
This illustrates a critical truth about bridging finance: your exit strategy is not just important for getting approved. It's your actual plan for repaying expensive short term debt. Get it wrong and you pay the price in extended interest, forced sales, or worse.
Here's what actually happens in practice: most bridging loan problems stem from weak exit planning, not from the cost of the finance itself. People focus on negotiating 0.1% better rates while ignoring whether their exit strategy is realistic. This guide explains every bridging exit strategy lenders accept, how to evidence each route, and what to do when your planned exit fails.
Why Your Exit Strategy Is Critical
Bridging loans are designed to be temporary. Interest rates of 0.55% to 1.5% per month (6.6% to 18% annually) make bridging prohibitively expensive for long term holding. Every extra month you hold the bridge costs serious money. In our experience, the difference between a successful bridging transaction and a problematic one usually comes down to exit planning, not to the bridging loan itself.
The Cost of a Failed Exit
On a £500,000 bridge at 0.85% per month, each extra 3 months costs £12,750 in additional interest. A 6 month delay costs £25,500. A failed exit that extends the loan by 12 months costs £51,000. This is why exit strategy cannot be an afterthought.
Lenders scrutinize exit strategies carefully because their risk materializes if you cannot repay. A strong, credible exit gets you approved with good rates. A weak or vague exit results in decline or expensive terms. We see applications declined every week not because the deal is bad, but because the exit strategy is wishful thinking rather than a plan.
Exit Strategy 1: Property Sale
The most common bridging exit. You sell the secured property (or another property you own) and use the sale proceeds to repay the loan.
When This Works Best
- Property is already marketable (doesn't need major works)
- You're buying at auction below market value with immediate profit available
- You've already secured a buyer or have the property under offer
- Market conditions are favorable with properties selling within 8 to 12 weeks
- The property type and location have consistent demand
What Lenders Want to See
- Comparable sales evidence (recent sales of similar properties nearby)
- Estate agent appraisal or marketing valuation
- Realistic pricing (not hoping for best case scenario pricing)
- Sufficient equity buffer (if you need £450k to repay but property worth £500k, that's tight)
- Realistic timeline (properties in your area and type selling within your bridge term)
Example of Strong Sale Exit:
You're buying a house at auction for £380,000. Recent comparable sales show similar properties selling for £490,000 to £520,000. You need a £400,000 bridge (purchase plus costs and light refurbishment). Your exit evidence includes three comparable sales in the past 4 months and estate agent appraisal at £505,000.
Lender assessment: Strong exit. Large equity buffer (£105k+), recent sales evidence, credible pricing. Approved.
Risks and Mitigation
Risk: Market Downturn
Property values fall or sales volumes drop, extending your sale timeline beyond the bridge term.
Mitigation:
Build in 30% to 40% value buffer. Price realistically or below market to ensure quick sale. Have backup exit (refinance) ready.
Risk: Property Issues Discovered
Structural problems, legal issues, or other complications emerge that delay sale or reduce value.
Mitigation:
Commission full survey before taking bridging. Resolve legal issues upfront. Factor remediation costs into your numbers.
Risk: Buyer Falls Through
You have a buyer but they pull out close to completion, forcing you to re market.
Mitigation:
Keep backup interest warm. Be prepared to accept slightly lower offer for certainty. Budget extra 3 to 6 months beyond expected sale in your bridge term.
Timeline Planning
Be conservative with sale timelines. Here's realistic planning:
Standard Residential Sale Timeline:
- Marketing preparation: 2 to 4 weeks
- Finding buyer: 4 to 12 weeks (market dependent)
- Buyer mortgage and surveys: 4 to 6 weeks
- Legal work to completion: 6 to 10 weeks
- Total: 16 to 32 weeks (4 to 8 months)
Don't take a 6 month bridge expecting to exit via sale unless the property is already under offer. Take 12 months minimum for sale exits.
Exit Strategy 2: Refinance to Mortgage
You refinance from the expensive bridging loan onto a traditional mortgage, which has much lower interest rates (4% to 7% per year vs 9% to 18% for bridging).
When This Works Best
- Property will be mortgageable after works complete (habitable, meets lender requirements)
- You have sufficient income to support mortgage payments
- Your credit profile is acceptable for mortgage lending
- Property value after works supports the loan you need
- You're happy to hold the property long term as investment
Common Refinance Scenarios
Uninhabitable to Buy to Let Mortgage
You buy an uninhabitable property with bridging, refurbish it to liveable standard, then refinance onto a buy to let mortgage at 75% LTV. The rental income covers the mortgage, you repay the bridge, and you keep the property as a long term investment.
Chain Break to Residential Mortgage
You bridge to buy your next home while your current home sells. Once your sale completes, you use those proceeds plus refinance onto a standard residential mortgage to repay the bridge.
Commercial Property to Commercial Mortgage
You bridge to acquire commercial property quickly (auction, off market opportunity). Once owned and tenanted, you refinance onto a commercial mortgage at better rates.
What Lenders Want to See
- Mortgage broker confirmation that you're mortgageable (income, credit, LTV all work)
- Evidence of rental income if buy to let (market rent comparables)
- Property will meet mortgage lender requirements (habitable, no serious defects)
- Sufficient equity or deposit to hit required mortgage LTV (usually 75% max for BTL, 90% to 95% for residential)
- Clear timeline showing when refinance will happen
The Numbers Must Work
Example Refinance to BTL:
| Item | Amount |
|---|---|
| Property purchase price | £300,000 |
| Refurbishment costs | £50,000 |
| Bridging loan needed | £365,000 (inc costs) |
| Property value after works | £450,000 |
| BTL mortgage at 75% LTV | £337,500 |
| Your cash needed to repay bridge | £27,500 |
| Market rent | £1,800 per month |
| BTL mortgage payment at 5.5% | £1,548 per month |
This works: You need £27,500 of your own money to bridge the gap between the BTL mortgage and the bridging loan amount. The rental income comfortably covers the mortgage. Exit is credible.
Timeline Planning for Refinance
- Complete refurbishment: Variable (2 to 6 months typical)
- Mortgage application to offer: 3 to 6 weeks
- Legal work and valuation: 4 to 6 weeks
- Total: 3 to 8 months from bridge completion
Take a 12 month bridge minimum if planning refinance exit. This gives you buffer for works overruns and mortgage process delays.
Exit Strategy 3: Development Exit Finance
A specialized bridge that kicks in when your development completes but your units haven't sold yet. Allows you to repay development finance and gives you breathing room to sell units at full asking price rather than accepting rushed discounted offers.
When This Is Used
- Property development has completed (practical completion achieved)
- Units are either sold subject to contract or actively marketing
- You need to exit development finance (which is more expensive than bridging)
- You want to avoid fire sale pricing to achieve quick exit
- Your development lender won't extend the development facility
How It Works
Typical Structure:
You've completed a 6 unit development. Development finance is £1.8 million. All 6 units are under offer at £380,000 each (£2.28 million total) but sales are completing over the next 3 to 5 months, not simultaneously.
You take development exit bridging for £1.9 million at 0.75% per month for 12 months. This repays the development finance. As each unit sale completes, proceeds repay portions of the bridge. When the final sale completes 5 months later, the bridge is fully repaid.
Cost: Approximately £70,000 in bridge interest vs accepting £50,000 to £100,000 in discounts to achieve simultaneous sales under time pressure from the development lender.
Exit Strategy 4: Sale of Other Assets
You repay the bridging loan from selling assets other than the secured property. This might be another property, shares, a business, or other investments.
What Lenders Want to See
- Clear evidence the other asset exists and you own it (share certificates, property deeds, business accounts)
- Credible valuation of the asset
- Realistic timeline for selling the asset
- Explanation of why you're not selling this asset instead of taking bridging
This exit is harder to evidence because lenders question why you need bridging if you have valuable assets you plan to sell soon. The logic needs to be sound (tax planning, asset is illiquid but valuable, waiting for optimal market conditions).
Using Multiple Exit Strategies (Belt and Braces)
The strongest applications present a primary exit strategy plus a credible backup. This shows lenders you've thought through contingencies.
Example: Primary and Backup Exit
Primary Exit: Sale of the property. Comparable evidence suggests sale within 4 to 6 months at £525,000.
Backup Exit: If market softens or sale takes longer than expected, refinance onto buy to let mortgage at 75% LTV (£393,750 based on £525k value), requiring £56,250 of your own funds to bridge the gap. Rental income £2,200 per month comfortably covers mortgage.
This dual approach dramatically increases approval likelihood and often secures better rates.
What to Do If Your Exit Strategy Fails
Despite good planning, exits sometimes fail. Markets shift, buyers pull out, works overrun, regulations change. Here's what actually works when your exit strategy isn't going to plan:
Step 1: Communicate Early
Contact your lender as soon as you realize the exit might not happen as planned. Lenders appreciate honesty and early warning. Last minute surprises damage relationships and reduce their willingness to help.
Step 2: Request an Extension
Most lenders will grant 3 to 6 month extensions if you're making genuine progress toward exit. Expect to pay an extension fee (0.5% to 1% of facility) plus continued monthly interest. Extensions typically require demonstrating concrete progress (property under offer, mortgage application in progress, works nearly complete).
Step 3: Pivot to Alternative Exit
If sale isn't working, can you refinance? If refinance isn't working, can you bring in equity partners? If original property sale is slow, can you sell a different asset? Be creative but realistic.
Step 4: Consider Bringing in Capital
Family loan, personal funds, selling other assets, bringing in an investor. Expensive bridging being extended repeatedly destroys value. Sometimes accepting dilution or using personal reserves is the least bad option.
Step 5: Price Realistically
If you're trying to sell, aggressive pricing that extends the timeline by 6 months costs more in bridging interest than accepting a 10% lower price for quick sale. Run the numbers objectively.
Frequently Asked Questions
Plan Your Bridging Exit Strategy with Expert Help
We help structure bridging loans with credible exits that lenders accept. Whether you're planning to sell, refinance, or need a development exit, we'll help you present your strategy in the strongest possible way.