A commercial bridge to let is a short-term bridging loan that funds the purchase of a vacant or under-let commercial property, gives you time to secure tenants and stabilise the income, and is then repaid by refinancing onto a long-term commercial investment mortgage. It is the standard route for buying an asset that a mortgage lender will not fund today but will fund once the leases are signed.
The strategy works because the value and lendability of a commercial building depend heavily on its income. An empty unit or a building with short leases and weak tenants is hard to mortgage. The same building, let on sensible terms to a reasonable covenant, can refinance comfortably. The bridge pays for the gap between the two.
Key takeaways
A commercial bridge to let buys an under-let or vacant building, funds the letting period and is repaid by a commercial investment mortgage.
The bridging lender lends on the current value; the mortgage lender lends on the income once let.
Lease length, break clauses, tenant covenant and rent level decide whether the refinance works.
Retaining or rolling up interest covers the empty period, but reduces the net advance.
Choose a term with a buffer for slow lettings, and model the refinance before you exchange.
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How does a commercial bridge to let work?
The process has three stages, and each one should be planned before you exchange contracts.
Purchase on a bridge. The bridging lender values the building as it is, usually on a vacant possession or part-let basis, and advances a percentage of that value or the price, whichever is lower.
Stabilise and let. You carry out any light works, market the space, agree heads of terms and complete leases. Interest is usually retained or rolled up during this period so you are not paying monthly from your own cash while the building is empty.
Refinance. Once tenants are in and rent is being paid, a commercial mortgage lender values the building as an investment, based on the income, and lends long term. That loan repays the bridge.
If the building needs more than cosmetic works before it can be let, look at our refurbishment bridging loans page, which covers staged drawdowns and lending on value after works.
Which properties suit a bridge to let strategy?
Any commercial property that will be lettable and mortgageable once stabilised can work. Common examples include:
Vacant shops and parades bought at a discount, then let to local operators.
Industrial and warehouse units between tenants, where demand is strong but the unit is empty at purchase.
Office buildings with expiring leases, where you plan to re-gear or re-let floors.
Multi-let buildings with several voids that drag down the investment value.
Units bought at auction or from receivers, where completion is too fast for a mortgage lender.
For buildings that are vacant and likely to stay that way for some time, read our page on vacant commercial property finance, which covers how lenders handle void costs, insurance and empty rates.
What lease terms will the refinance lender want to see?
This is where most bridge to let strategies succeed or fail. Bridging lenders care about the exit, so they will ask what the commercial mortgage lender will accept. The refinance lender looks closely at the leases you have signed.
Lease factor
Why the lender cares
What tends to help the refinance
Unexpired term
Longer income is more secure and supports a longer loan
Several years unexpired, ideally beyond the first break
Break clauses
Lenders often assess income to the first break, not the lease end
Breaks well into the term, with penalties or notice periods
Tenant covenant
A financially strong tenant is less likely to default
Trading history, accounts, guarantees or a rent deposit
Rent level
Over-rented property may fall in value at review or renewal
Rent in line with market evidence from the valuer
Rent reviews
Upward-only or indexed reviews protect income
Clear review mechanism, regular intervals
Repairing obligations
Full repairing and insuring leases reduce landlord costs
FRI terms, or service charge that recovers costs
Security of tenure
Affects how easily you can recover the space
A position agreed with your solicitor at the outset
A short lease with an early break to a new start-up tenant may let the building but still leave it hard to mortgage. Agree heads of terms with the refinance in mind, and take advice from your solicitor and letting agent on the detail.
Have a deal in front of you?Send us the property and the numbers. We will tell you quickly whether it is fundable.
How much can you borrow on a vacant or under-let building?
The bridging lender lends against the valuation in the building's current condition and letting status. A vacant building is valued on a vacant possession basis, which is often well below its value once let. The loan to value is commonly up to 70% to 75% on a first charge for standard commercial property, and lower for vacant, secondary or specialist assets.
For example, and purely as an illustration with round numbers: a vacant industrial unit bought for £1,000,000 and valued at the same figure might support a bridge of up to £700,000. Once let, a valuer might assess it as an investment on its rental income. The commercial mortgage is then sized against that investment value and the rent, so the stronger the leases, the larger the refinance. Our LTV calculator helps you test the numbers.
Why does the exit depend on rental cover as well as value?
Commercial investment mortgage lenders size the loan on two tests: loan to value and interest cover, meaning the rent must cover the mortgage interest by a margin they set. A building can have plenty of value but too little rent to support the loan you need to repay the bridge.
Before you buy, we model the likely refinance with you: expected rent, realistic lease terms, a sensible void period and the cover a term lender is likely to want. If the numbers only work on optimistic assumptions, it is better to know before exchange. Our bridge vs mortgage calculator shows the cost of each stage, and our sister commercial mortgage specialists can advise on the term loan.
Should interest be retained, rolled up or serviced?
Retained interest: the lender deducts the interest for an agreed period from the gross loan at completion. Useful while the building is empty, but it reduces the net advance.
Rolled up interest: interest accrues and is repaid with the loan at the end. Similar effect to retained, and you only pay for the months you use on some products.
Serviced interest: you pay monthly. This can increase the net advance and may suit a part-let building where existing rent covers the payments.
Many borrowers retain interest for the expected letting period and switch to servicing once rent starts. Lenders differ on whether they allow this, so we check before you choose.
What can go wrong, and how do you protect the exit?
The common problems are predictable:
Letting takes longer than planned. Choose a term with a buffer, often 12 to 18 months rather than the minimum.
Leases are signed on terms the mortgage lender dislikes, such as very short terms or early breaks.
The valuation as let comes in lower than expected because rent is above market evidence.
Tenant default soon after the lease starts, which can delay the refinance.
If the term is running out, an extension or a refinance onto another bridge may be possible, but both cost money. Our guide to commercial bridging exit strategies covers what lenders want to see at each stage.
Is a commercial bridge to let regulated?
A bridge to buy commercial property to let to business tenants is for investment purposes and is unregulated, so we arrange it directly. If the building includes a flat that you or an immediate family member will live in, the loan may be a regulated mortgage contract, and we would introduce you to a firm directly authorised by the Financial Conduct Authority. This is common with shops that have flats above, so tell us early how any residential part will be used.
Unregulated commercial and investment bridging is arranged directly. Any case where the security includes a home you or an immediate family member occupies, including a flat above commercial premises, may be regulated and is introduced to a firm directly authorised by the Financial Conduct Authority. We are not directly authorised by the Financial Conduct Authority ourselves. Your property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
What is the difference between bridge to let and a normal bridging loan?
A bridge to let is a bridging loan where the planned exit is a long-term investment mortgage once the property is let, rather than a sale. Some lenders package both stages together with pre-agreed refinance terms. For commercial property it is more common to arrange the bridge and then refinance with a separate commercial mortgage lender when the leases are in place.
How long do I need to let the property before refinancing?
Commercial mortgage lenders generally want the lease signed, the tenant in occupation and rent being paid. Some want to see a few months of rent received, and some will lend at completion of the lease on a strong covenant. Allow time for marketing, negotiation, legal work and the mortgage valuation, which is why many borrowers choose a 12 to 18 month bridge.
Can I use a commercial bridge to let on a part-let building?
Yes. Part-let buildings are a common use, because the existing income can help service the interest while you let the vacant space. The bridging lender values the building as it stands, and the refinance lender will look at the whole rent roll once the voids are filled.
Do lenders accept short leases for the refinance?
Some do, but short leases and early break clauses usually mean a lower loan, tighter terms or fewer lenders. A refinance lender often assesses income only to the first break. If the bridge to let strategy depends on a particular loan size, aim for lease terms that support it and take advice from your letting agent.
Can I refinance with the same lender?
Some bridging lenders also offer term loans and may refinance their own bridge, sometimes on pre-agreed terms. Others only lend short term. We compare the combined cost of both routes and check that the term lender's lease and income criteria fit your plans before you commit to the bridge.
What if I cannot let the property before the bridge ends?
Speak to us well before the term expires. Options include an extension with the existing lender, a refinance onto a new bridge, selling the property, or letting on revised terms. Each has costs, and default interest can apply if a loan runs past its term, so early action matters.
