Bridging finance for below-market deals

Turning discounts into doable deals

Below-market-value opportunities rarely wait for slow finance. Whether you are bidding at auction, negotiating a distressed sale or acting on a time-limited discount, bridging can convert an agreed price into a completed purchase without draining your refurbishment budget. The key feature that makes BMV bridging effective is underwriting against open market value rather than the discounted purchase price. If a property is worth more than you are paying, some specialist lenders may advance funds against that higher valuation, allowing you to retain cash for works or contingency.

Rates in 2025 have softened, with average monthly pricing reported around 0.81% in Q2 compared with 0.86% in Q1. Stable base rates, lower swaps and keener lender competition are helping. Application volumes have risen and quarterly gross lending has approached the £200m mark, indicating active appetite for well-prepared cases. Lower average LTVs and stronger borrower equity have also supported sharper pricing.

Speed remains the selling point. With the right valuation, legal coordination and documentation, funds can be readied quickly - often in days for straightforward cases and within 3 to 6 weeks for more complex transactions. That can be the difference between winning and losing an auction lot or securing a repossession purchase.

Understanding OMV lending is critical: it turns a discounted price into useable leverage so you can buy fast and still fund the improvement plan.

Bridging is short term and costlier than standard mortgages, so an exit strategy is non-negotiable. Most borrowers plan to sell, refinance to a buy-to-let or residential mortgage, or refinance with a specialist lender once value has been added. Recent case studies show sizeable facilities - for example, a multimillion-pound country home bought below valuation - completing within weeks, with interest retained and works funded, then refinanced or sold once improvements are complete.

Who benefits from this approach

BMV bridging suits investors, landlords, developers and homeowners who have identified a genuine discount to open market value and need certainty of funds on a tight timetable. It is especially relevant to auction lots with 28-day deadlines, probate or part-complete refurbishments, portfolio purchases and title splits where conventional mortgages are too slow or inflexible. First-time investors can also benefit if they have experienced advisers and a clear exit route. For owner-occupiers, careful suitability checks are essential due to the higher short-term cost and the need for a realistic refinance or sale timeline.

Ways to structure your BMV bridge

1. Purchase against OMV with interest retained - maximise day-one leverage and preserve cashflow.

2. Purchase plus refurbishment facility - staged drawdowns for works to increase end value.

3. Light refurb bridge - suits cosmetic upgrades with a swift exit to buy-to-let.

4. Heavy refurb or conversions - higher contingencies, monitoring and staged releases.

5. Portfolio or title-split bridge - fund multiple units with a planned refinance or sell-down.

6. Green bridging - finance energy-efficiency improvements to meet EPC targets and future-proof exits.

Cost, impact, returns and risks

Eligibility and what lenders look for

Lenders focus on three things: the property’s current open market value, the credibility of your plan and the strength of your exit. A recent, independent valuation is crucial because OMV drives day-one leverage in BMV deals. Your experience helps but is not always mandatory if your professional team is strong and the works are straightforward. Lower LTVs and a meaningful equity contribution often secure better rates and faster decisions. Expect to evidence income or rental cover where appropriate, provide a clear schedule of works and demonstrate the exit route - sale with comparable evidence, remortgage to a high-street or specialist buy-to-let, or refinance post-refurbishment. Kandoo can help package your case, align the valuation brief and coordinate legal work so lenders receive a clean, decision-ready file.

From offer to funds - a simple path

1. Share details, photos and target purchase price and timing.

2. Indicative terms issued based on OMV and LTV appetite.

3. Instruct valuation and collect legal and KYC documents.

4. Underwriting review with works schedule and exit evidence.

5. Issue facility offer and confirm interest arrangement method.

6. Complete legals, sign documents and draw funds to complete.

7. Begin works with staged releases where applicable.

8. Refinance or sell and settle the bridge on schedule.

Pros and cons at a glance

Before you commit - what to watch

Treat the exit as your primary risk control. Sense-check the timeline against realistic contractor availability, planning or licensing requirements and conveyancing steps for your onward sale or refinance. Build contingencies for works and interest because even minor delays can compress your margin. Make sure the valuation reflects local comparables and the property’s condition as at day one, not what it will be after improvements. If your chosen exit is remortgage, confirm lender criteria for the post-works product, including EPC expectations, seasoning and rental cover. For auctions, have documents ready early - ID, source of funds, company structures and titles - to avoid legal bottlenecks. A measured approach protects returns while preserving speed.

Alternatives if bridging is not the fit

1. Private investor loan with profit share.

2. Joint venture with a contractor or developer.

3. Secured business loan against other assets.

4. High-street mortgage with delayed completion where feasible.

5. Mezzanine finance to top up equity on development.

FAQs

Q: What is BMV bridging and how does OMV help? A: BMV bridging lends against open market value rather than the discounted price, increasing day-one funds so you can complete quickly and retain cash for works.

Q: How fast can I complete? A: Straightforward cases can complete in days, with more complex deals typically closing within 3 to 6 weeks depending on valuation, legal work and title issues.

Q: What are typical costs? A: Expect a monthly rate around recent market averages, plus arrangement, valuation, legal and potential exit fees. Costs vary by LTV, property and borrower profile.

Q: What exit routes work best? A: Sale after refurbishment, refinance to buy-to-let or a residential mortgage, or specialist refinance once value has been added. Choose the route that matches your plan and timeframe.

Q: Can I fund refurbishment as part of the bridge? A: Yes. Many facilities include staged drawdowns to fund works, which can accelerate value-add and strengthen your refinance or sale outcome.

Q: Is this suitable for homeowners? A: It can be, but careful suitability checks apply. Understand the short-term cost, risks and exit requirements before proceeding.

How Kandoo helps deliver results

Kandoo is a UK-based retail finance broker, connecting you to specialist bridging lenders who understand BMV and OMV underwriting. We assemble your case, coordinate valuation and legals, and push for competitive pricing with sensible LTVs. You get a time-efficient process and a clear plan to exit on schedule. Speak to us for tailored terms and timelines.

Strong opportunities deserve decisive funding. Make your discount work harder.

Next steps:

• Request indicative terms with your target purchase, OMV and timeline.

• Book a valuation brief aligned to your intended works and exit.

• Prepare legal documents early to keep completion on track.

Important information

Bridging is short-term secured borrowing. It may be unsuitable if you do not have a credible exit within the term. Costs can be higher than mortgages and your property may be at risk if you do not keep up repayments. Seek professional advice tailored to your circumstances.