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Ground-up, conversion and part-built schemes, from site purchase to exit.
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Which cap binds, loan to cost or loan to GDV, and the real day-one equity.
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Underwritten on stabilised yield and DSCR, not sales rate.
Mezzanine and stretched senior
The gap between senior LTC and what you can fund, and the true blended cost.
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Where refurbishment stops being a bridge: structure, change of use, drawdowns.
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Valuing an unfinished asset when the contractor has gone.
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Short-term debt where the deadline, the asset or the exit will not wait.
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Purchase bridge
Completing before the money is in place: chain breaks, tight deadlines, unmortgageable stock.
Development exit finance
Off development debt at a lower rate, to buy sales time and release equity.
Auction finance
A 28-day clock, and what must be in place before the hammer falls.
Pre-planning and planning gain
Lending against current value with planning upside.
Below market value purchase
Day-one lending against open market value rather than price.
Second charge and capital raising
Raising against existing assets, and first-charge consent.
Light refurbishment finance
Bridge plus refurb tranche, and where the development boundary sits.
Also structuredBridge to let and refinance
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Mortgages and term finance
Long-term debt against income, once the asset is built, let or trading.
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Buy to let mortgages
ICR stress testing, limited company against personal, portfolio rules.
HMO mortgages
A higher cover test, licensing, and the two valuations a lender takes the lower of.
Commercial term, investment
Tenant covenant and lease term, and why DSCR sets the loan.
Commercial term, owner-occupier
Trading accounts and EBITDA rather than rent roll.
Portfolio refinance
Cross-collateralisation, and one facility against individual loans.
Stabilisation and term refinance
The income test replacing the GDV test, and the letting void before term debt engages.
Co-living and PBSA
An operational asset valued on income, and the operator covenant.
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Funding the business behind the property, secured on the ledger, the equipment or the covenant.
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Size the facility against site cost, build cost and GDV.
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Refinance the development facility and release equity at PC.
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What a bridge costs, and what actually clears on day one.
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Fund the purchase and 100% of the works, with interest rolled to exit.
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The rent a buy to let must achieve to clear a lender's cover test.
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What a commercial property's income will support, and what it costs.
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Bridge it › Below market value purchase
Buying below market value creates a problem with many lenders: they lend against the purchase price, not the valuation. Buy at £750,000 what an independent valuer assesses at £1,000,000 and a conventional 75% facility advances 75% of the £750,000, so the discount you negotiated does nothing for your funding.
A smaller group of specialist lenders will instead lend against the assessed open market value, subject to the lower of 75% of OMV or 100% of the purchase price. On the same transaction that materially reduces the cash you have to find, and for a portfolio buyer it is the difference between completing one purchase and several.
The headline percentages are gross, and that is where most of the confusion sits. A lender advertising 75% does not advance 75% in usable funds: on a twelve month term at a typical rate, a 75% gross facility commonly reduces to nearer 65% net on day one once fees and retained interest come out. The same applies to the 100% cap on price. The cash you have to find is the purchase price less the net advance, so it is the net figure worth asking for.
Gross against net, so you know the cash you actually need.
The discount evidenced, not asserted
A lender will lend against open market value only where an independent RICS valuation supports it and the reason for the discount is documented. A motivated seller, a probate sale or a portfolio break-up are reasons; an opinion is not.
Gross and net set out separately
We show the gross facility, the deductions and the money that actually reaches the completion statement, because those are three different numbers and only the last one buys the property.
Both caps tested
75% of open market value and 100% of purchase price are applied together and the lower binds. Which one binds moves with the size of the discount: past a discount of roughly 25% the OMV cap clears the whole price and the purchase funds itself, below that you are finding the difference. Worth knowing before you agree a price.
Day one equity established up front
The cash you need is the purchase price plus costs, less the net advance. We establish it before you commit rather than at the point the completion statement arrives.
Which lenders play here
A subset of unregulated bridging lenders will lend on open market value; most will not. The wrong lender does not price this differently, it simply declines the basis.
75%
Gross LTV of open market value
100%
Cap on purchase price
65%
Typical net day one advance
35%
Discount where the net clears the price
Indicative, and not an offer. What a lender will actually do depends on the scheme, the borrower and a full valuation.
What to have ready
Bring these and we can tell you where you stand.
Each one is something a lender will ask for. Having it early is the difference between a fast answer and a slow one.
✓Purchase price, and the open market value you believe supports it
✓Why the property is discounted, documented rather than described
✓An independent RICS valuation, or the instruction ready to go
✓Your contribution, and where it is coming from
✓Your exit: sale, refinance to term, or letting, with evidence
✓Any works planned, with a schedule, if value is being added as well
Related case study
£1.2m Semi-Commercial Bridge and Refinance to Commercial Mortgage
Related
Worth reading on this
Article
Below Market Value Bridging Finance: What the Headline LTV Doesn’t Tell You
Article
How Bridging Works: Term, Interest and the Exit
Article
What is Heavy Refurbishment Finance and When Does it Become More Than a Refurb?
Next
Related in this pillar.
Common questions
The questions this product raises.
Will a lender lend on the valuation rather than the price I paid?
If the discount is genuine, yes, but the price still counts. Lenders who lend on open market value cap the loan at the lower of 75% of that value or 100% of the price you paid. Find those lenders before you make an offer, because the wrong lender does not reprice this, it declines.
What evidence of the discount will a lender want?
An independent RICS valuation that supports the open market value, and a documented reason for the discount. A motivated seller, a probate sale or a portfolio break-up are reasons. An opinion that the property is cheap is not.
Can a discounted purchase fund the whole price?
On the gross figure, yes, once the discount passes roughly 25%, because 75% of open market value then covers the full price. The money you actually receive on day one is lower, typically nearer 65% of value once fees and interest come out, so the discount needs to be nearer 35% before the net advance clears the price. Purchase costs are still yours either way.
How much cash will I need on completion?
The purchase price plus costs, less the net advance. Take a £750,000 purchase valued at £1,000,000. The gross facility is £750,000, but the net advance is nearer £650,000, so you find c.£100,000 plus costs. We work that figure out before you commit, not when the completion statement arrives.
Bring us the detail.
Send what you have. We will tell you what is fundable and what needs work before anyone approaches a lender.
Specialist property finance for developers who want the numbers to survive underwriting.
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Fundingwise Limited is not authorised or regulated by the Financial Conduct Authority, and arranges unregulated finance only. That means lending secured against commercial property, or against residential property that is not, and will not be, occupied by the borrower or an immediate family member as a main residence. We do not advise on or arrange regulated mortgage contracts or regulated bridging loans. Because this finance is unregulated, FCA conduct rules and access to the Financial Ombudsman Service do not apply. Fundingwise Limited is registered in England and Wales, company number 13750788.