Bridge-to-term finance
The structure that carries an asset from where it is now to the point a term lender will refinance it on stabilised income. A bridge-to-term facility is short-dated debt with the long-term exit lined up from the outset, so the bridge and the term loan are arranged as one plan rather than two disconnected deals.
What is a bridge-to-term loan?
A bridge-to-term loan is a short-dated facility arranged together with the long-term debt that will replace it, so the borrower has a defined route from a bridge onto a term loan from day one. The bridge funds the asset through a transitional period, an acquisition that has to move quickly, a completion that needs to lease up, or an income stream that has to settle, and the term facility refinances it once the asset meets the term lender's tests. It is the property-investment cousin of a bridge-to-let, where a short bridge is followed by a buy-to-let or commercial term loan on the same asset.
The reason to structure a bridge and a term loan together is certainty. A standalone bridge with no confirmed exit carries exit risk: if the planned refinance does not materialise, the short-dated debt becomes expensive and hard to repay. Arranging the term loan alongside the bridge removes that risk, because the term lender's appetite, the rough loan size and the conditions are understood before the bridge draws. The bridge is then sized and termed to deliver the asset into the term loan, and the borrower knows the destination, not just the starting point.
We are arrangers, not a lender. We structure bridge-to-term deals by lining up the short-dated facility and the term refinance together, placing each with the specialist real estate lenders, debt funds and term lenders active in the relevant part of the market. The bridge is never left without a confirmed way out, and the term loan is sized on the income or value the asset will reach, not the position it is in today. All terms are illustrative, subject to principal sign-off, and not an offer of finance.
- Short-dated debt arranged together with the term loan that will replace it
- Carries an asset to the point a term lender will refinance it on stabilised income
- Removes the exit risk of a standalone bridge by confirming the term route first
- The property-investment cousin of a bridge-to-let structure
- Bridge sized and termed to deliver the asset into the term facility
- Placed with short-dated lenders and term lenders as one coordinated plan
Indicative terms
- Bridge sizeFrom around 250,000 pounds upward
- Loan to valueIndicatively up to 70 to 75 percent of value on the bridge
- Bridge termMonths not years, typically 6 to 24 months
- Bridge rateIndicatively priced per month, above the term loan that follows
- Term loanLong-term facility sized on stabilised income and interest cover
- Income basisTerm loan underwritten on the income the asset reaches, not today's
- ExitRefinance onto the term loan arranged alongside the bridge
- SecurityFirst legal charge, carried across from bridge to term
Indicative only. Terms vary by lender, scheme and borrower and are not an offer of finance.
Who it suits
- Investors acquiring an asset that needs to settle before term debt fits
- Borrowers carrying a completed scheme to stabilised income and a term loan
- Buyers moving fast on a purchase that a term lender cannot complete in time
- Owners with rental income that has to mature before a term refinance
- Investors who want the bridge and the term exit arranged as one plan
Discuss bridge-to-term finance
A view on fundability within one working day.
How bridge-to-term finance is put together
Confirm the term route first
We establish the term lender's appetite, the likely loan size and the conditions before anything draws, so the destination is known from the start.
Arrange the bridge to fit
We size and term the short-dated facility to carry the asset to the point the term lender will refinance it, with the exit documented.
Mature the income
The asset settles, leases up or completes its transitional period while the bridge is interest-only or rolled up so cashflow is not strained.
Refinance onto the term loan
Once the asset meets the term lender's tests, the term facility draws and repays the bridge, completing the planned route.
What the bridge lender and the term lender each test
A bridge-to-term structure is underwritten twice, lightly by the bridge lender and fully by the term lender, and both views are taken before the bridge draws. The bridge lender is security-led: it wants a clear charge over a financeable asset and a credible, near-term route to repay, which in this structure is the confirmed term refinance. Usually that is a first charge, though where an existing senior facility stays in place the bridge can sit as a second charge behind it, subject to the senior lender's consent and an intercreditor agreement. The term lender is income-led: it underwrites the stabilised rental income, the interest cover the income provides, the quality of the tenant or operator, and the value the asset reaches once it settles. The bridge is sized so that, by the time it matures, the asset clears the term lender's tests, typically a minimum interest cover ratio on settled income. We get both lenders comfortable at the outset, so the bridge is arranged knowing the term loan it leads to, rather than hoping a refinance will appear later.
Loan sizing across the bridge and the term loan
The bridge and the term loan are sized on different bases, which is the point of the structure. The bridge is sized on value, indicatively up to 70 to 75 percent, and priced per month because it is short-dated and transitional. The term loan is sized on stabilised income and interest cover: the lender takes the net rental income the asset reaches once it settles, applies a minimum interest cover ratio, and lends the amount that income supports, indicatively up to 65 to 75 percent of value depending on the asset and the cover. Where the term loan will be larger than the bridge, because the income has grown, the refinance can repay the bridge and release additional funds. Where it will be smaller, the borrower plans for the difference. We model both facilities and the gap or surplus between them before the bridge draws. All bands are illustrative, vary by lender and asset, are subject to principal sign-off, and are not an offer.
The cost of the bridge against the term loan that follows
A bridge-to-term structure carries two costs: the short-dated bridge, priced per month, and the term loan, priced per year. The bridge is the dearer money and should be held only as long as the asset needs to reach the term lender's tests, so a short, well-planned transitional period keeps the cost down. Expect, on the bridge, a lender arrangement fee of indicatively around 1 to 2 percent, a valuation and legal costs, and on the term loan a further arrangement fee, valuation and legal costs at the refinance. Arranging both together can streamline the valuation and legal work and avoids paying twice for a fresh search at the term stage. We disclose our broker fee in writing, quote the combined all-in cost across the bridge and into the term loan, and never claim an exclusive panel or an exclusive tie to any lender. The figures are indicative and not an offer of finance.
Bridge-to-term against a standalone bridge or going straight to term
A standalone bridge is the right tool when you genuinely only need short-dated money and a clean, certain exit such as a sale exists. The trouble comes when the planned exit is a term refinance that has not been confirmed: that is exit risk, and it is what a bridge-to-term structure removes by arranging the term loan first. Going straight to a term loan is cheaper and simpler when the asset already meets the term lender's tests, with proven, stabilised income, so no bridge is needed at all. Bridge-to-term is for the in-between case: the asset is sound and will support term debt, but not yet, so a coordinated bridge carries it there. We test which case you are actually in, because paying for a bridge you do not need, or taking a standalone bridge you cannot exit, both cost more than the right structure.
Bridge-to-term finance: common questions
Is it a good idea to get a bridging loan?
A bridging loan is a sound idea when you need to move faster than a term lender can, or when an asset cannot yet be financed on term debt, and you have a clear, confirmed way to repay it. It is a poor idea when the exit is vague, because bridging is priced per month and exit risk is the main danger. A bridge-to-term structure addresses this by arranging the term refinance before the bridge draws, so the exit is confirmed rather than hoped for.
How much is a 200k bridging loan?
On a 200,000 pound bridge at an indicative 0.95 percent per month, the interest is around 1,900 pounds a month, so a six-month bridge costs roughly 11,400 pounds in interest plus an arrangement fee of around 1 to 2 percent and legal and valuation costs. In a bridge-to-term structure the bridge is held only until the term loan refinances it, so keeping the transitional period short keeps the cost down. The figures are illustrative and not an offer.
Is a bridge loan a term loan?
No. A bridge loan is short-dated debt, usually running months and priced per month, designed to be repaid quickly by a sale or a refinance. A term loan is long-dated debt, running years and priced per year, sized on income and interest cover. A bridge-to-term structure deliberately joins the two: the bridge carries the asset until it qualifies for the term loan, which then refinances the bridge. They are different facilities arranged as one plan.
What are the rules of a bridging loan?
A bridging loan is a short-term, first-charge loan secured against property, usually running months rather than years, with the lender focused on the security and a clear, credible exit rather than on long-term affordability. The core rule is that a defined repayment route must be in place before the loan draws. In a bridge-to-term structure that route is the confirmed term refinance. Lending to a company against an asset held as an investment is unregulated commercial lending.
What is the difference between bridge-to-term and bridge-to-let?
They are close cousins. Bridge-to-let pairs a short bridge with a buy-to-let or commercial term loan on the same asset, classically for a property that needs work or letting before it qualifies for the term mortgage. Bridge-to-term is the broader property-investment version: a short bridge arranged together with a term loan that refinances it once the asset reaches stabilised income. Both remove the exit risk of a standalone bridge by confirming the term route from the outset.
Why arrange the bridge and the term loan together?
Certainty. A standalone bridge with no confirmed exit carries the risk that the planned refinance never materialises, which turns short-dated debt into an expensive problem. Arranging the term loan alongside the bridge means the term lender's appetite, the rough loan size and the conditions are understood before the bridge draws, so the bridge is sized and termed to deliver the asset straight into the term facility.
Discuss bridge-to-term finance
Send us your scheme and we will come back with a view on fundability and likely terms within one working day.