Hosted by Georgina. Written by Matt Lenzie. Published by Construction Capital, a trading name of Lenzie Consulting Ltd. Market commentary as at the third quarter of 2026.
An eight minute walkthrough of how bridging is actually underwritten. Why two borrowers can ask for the same money against the same building and get completely different answers, what the three exits are, and what a two hundred thousand pound bridge really costs once the fees are counted.
The same material in podcast form, episode nine of The Construction and Capital Podcast. Georgina works through the three exits and how each is evidenced, open against closed, the three ways interest is charged and what each does to the cash you actually receive, and where the regulated line falls.
Listen to this episode: https://constructioncapital.transistor.fm/episodes/bridging-loans-why-the-exit-decides-everything
Podcast home: https://constructioncapital.transistor.fm/
All episodes: https://constructioncapital.transistor.fm/episodes
Subscribe: https://constructioncapital.transistor.fm/subscribe
RSS feed: https://feeds.transistor.fm/the-construction-capital-podcast
A bridging loan is short term borrowing secured by a legal charge over property. That is the definition, and on its own it explains almost nothing, because it describes the security and the duration while saying nothing about the part that decides whether you get the loan at all.
Here is the part that does. A bridging lender is not really lending against the building. It is lending against the event that repays the loan, and that event is called the exit. Everything else, the rate, the loan to value, the term, the fee, follows from how credible that exit is and how well you can evidence it. A borrower who arrives with the exit documented gets better terms than one who arrives with a better building and a vague plan.
Construction Capital arranges bridging from 0.55 percent a month, ranging to 1.0 percent, up to 75 percent loan to value on residential security and 65 to 70 percent on commercial, over terms of 1 to 18 months, with arrangement fees of 1 to 2 percent of the loan (Construction Capital, August 2026). The Bank of England base rate has been 3.75 percent since December 2025 (Bank of England), which sits behind every lender's cost of funds even though bridging rates do not track it directly
Exit
Sale
Refinance
Incoming Capital
What repays the loan
Proceeds from selling the security
Longer term debt replacing the bridge
A separate sale or a known receipt
What a lender wants to see
A realistic price, evidence of demand, a sensible timeline
The property in a mortgageable state, and a lender willing to take it
Documentation, because this is the exit most likely not to arrive
A closed bridge has a defined exit with a date attached, typically exchanged contracts. An open bridge has an intended exit and no fixed date. Most borrowers assume they are closed and discover at underwriting that they are open. Exchanged contracts, a formal mortgage offer or a signed facility agreement move you from open to closed. An agent's valuation and an intention do not.
nterest is the largest component but never the whole of it. On a £200,000 bridge held for 12 months at 0.75 percent a month, the interest is roughly £18,000, the arrangement fee at 1.5 percent is £3,000, and valuation and legal costs sit on top. Some lenders charge an exit fee, commonly 1 percent, and some do not.
The lever that matters most is the term, because interest is charged monthly. Every month you shorten the loan is money saved, and every month you overrun costs at a monthly rate. Borrowers routinely underestimate how long works and sales take, which is why taking a slightly longer term than you expect to need is usually cheaper than extending later.
One point that surprises people: on a retained facility the lender deducts the whole term's interest from the advance at the outset. On that £200,000 example you would receive around £182,000 in cash and repay £200,000. Model that before you commit.
All figures indicative, from Construction Capital, August 2026. Rates vary by lender, security, charge position and borrower, and nothing here is an offer of finance.
Our complete range of Bridging Finance Resources is Here.