Bridging finance for mixed-use buildings

Why mixed-use bridging is surging in 2025

Mixed-use is back at the heart of British high streets. Shops with flats above, corner units with offices, even small parades combining retail and residential are drawing investors who want diversified income and tangible local impact. Yet traditional mortgages can be slow or inflexible when timings are tight or refurbishment is required. That is where bridging finance can be decisive.

In 2025 the UK bridging market is forecast to reach around £12.2 billion, reflecting demand for speed and flexibility. Lenders are comfortable moving quickly on semi-commercial assets where they can underwrite against the property and a clear plan. Higher loan-to-value ratios up to 75% are increasingly available with strong cases, reducing the equity needed to secure high-value assets in markets like London and the South East.

For auction purchases, bridging helps buyers meet 28-day completion deadlines. It also works when a building needs work before a term mortgage is viable. Many mainstream lenders avoid properties that require refurbishment or that have mixed uses. Bridging fills that gap by funding light or heavy works, with a view to refinancing once the asset is stabilised and income-producing.

Pricing is straightforward to understand if you focus on the real monthly cost. Semi-commercial bridging can start from around 1.25% per month, with typical terms from 1 to 12 months and LTV often up to 70% for mixed-use. Where the asset, experience and exit are strong, some lenders consider up to 75% LTV. Funds are usually based on the current value, sometimes taking into account the post-works value if the schedule is credible and monitored.

This is not just a developer tool. First-time commercial buyers, landlords scaling their portfolios, and small business owners living above the shop are using bridging to move quickly on opportunities. It is particularly relevant for town centre regeneration where older stock needs upgrading to meet modern standards.

Understanding APR is not just about percentages - it is about knowing what you will pay in real terms.

A strong exit strategy underpins the whole proposition. Plan for a refinance to a commercial or buy-to-let mortgage, or a sale after refurbishment. Get quotes and timelines in writing. The clearer your exit, the sharper your pricing and the smoother your approval.

Who benefits most

If you are targeting a high street unit with a flat above, bidding at auction, acquiring a part-vacant parade, or converting commercial space to residential under permitted development, bridging can give you an edge. It suits buyers who have identified a value-add angle but need certainty of funds within weeks, not months. It can also help landlords consolidating debt or restructuring a portfolio where speed matters more than long-term rate on day one.

Applicants with some property experience will find it easier, though first-time mixed-use buyers are not excluded where the exit and professional team are credible. If your security is sound, your works schedule is costed, and your exit is realistic, bridging can unlock opportunities otherwise out of reach.

Your funding routes

1. Acquisition bridge for mixed-use purchases on tight timelines.

2. Auction finance to complete within 28 days.

3. Light refurbishment bridge for cosmetic upgrades and compliance.

4. Heavy refurbishment bridge for structural works and reconfiguration.

5. Bridge-to-let or bridge-to-commercial term refinance after stabilisation.

6. Developer exit bridge to release capital while marketing or re-letting.

7. Refinance of existing debt where maturity is imminent and time is short.

Costs, impact, returns and key risks

What lenders look for

Eligibility for mixed-use bridging comes down to three pillars: the asset, the plan, and the borrower. The property should be marketable in its location, with a clear rationale for value uplift or income stability. Your plan needs a detailed schedule of works, realistic costings, and a timeline that includes contingencies. Lenders will expect a defined exit strategy, whether that is a refinance to a term mortgage after completion or a sale once the asset is repositioned.

Borrower experience helps, especially with mixed-use projects, but it is not mandatory if you surround yourself with the right professionals. Building control, planning position, and any licensing requirements should be understood from the outset. Demonstrating pre-application advice, contractor quotes and agent appraisals can strengthen your case. At Kandoo, a UK-based retail finance broker, we match applications to specialist lenders who understand semi-commercial assets, helping you present a robust file that can secure competitive terms.

From enquiry to completion

1. Share the property details and your intended plan.

2. Receive indicative terms and initial affordability view.

3. Instruct valuation and start legal due diligence.

4. Finalise works schedule, costs and contingency buffer.

5. Lender issues offer subject to conditions being met.

6. Draw down funds and commence refurbishment programme.

7. Provide progress evidence for any staged releases.

8. Execute exit via refinance or sale on schedule.

The upsides and trade-offs

Read this before you commit

Speed is valuable, but discipline protects returns. Build a realistic programme and include a contingency for both time and cost. Fixed-price contracts and experienced contractors reduce overruns. Obtain written agreements in principle for your refinance route, and line up multiple lenders where possible. If your exit depends on new leases, secure heads of terms early and stress test the rent level and void periods. For auction buys, conduct as much legal due diligence as possible before bidding and assume conservative assumptions on works and valuation. The goal is to preserve optionality, so you can pivot to sale or refinance if conditions change.

Alternatives worth weighing up

1. Commercial or semi-commercial term mortgage if no works needed.

2. Development finance for extensive structural projects beyond refurbishment.

3. Second charge bridge against existing equity for deposit raising.

4. Joint venture equity to reduce leverage and share risk.

5. Cash purchase followed by refinance to release funds later.

Frequently asked questions

Q: How quickly can mixed-use bridging complete? A: With a clean legal pack and responsive parties, two to four weeks is common. Auction cases can complete within 28 days if valuation and legals begin immediately.

Q: What LTV can I expect on a shop with flats above? A: Many lenders cap at 70% for semi-commercial, though strong cases with clear exits and prime locations may achieve up to 75%.

Q: Can I fund refurbishment costs as part of the bridge? A: Yes. Lenders often fund light and heavy works with staged drawdowns linked to verified progress and updated monitoring reports.

Q: I am a first-time buyer of mixed-use. Is that acceptable? A: Potentially. A solid professional team, realistic costings and a credible exit can offset limited experience. Expect closer scrutiny.

Q: What does an exit strategy look like in practice? A: Common exits include refinancing to a commercial or buy-to-let mortgage after works, supported by rent evidence, or selling once value is added.

Q: Are monthly rates the best way to compare offers? A: Yes, because bridging is short term. Compare the full cost including fees, interest roll-up, valuation and legal expenses over the expected term.

How Kandoo helps you move faster

Kandoo connects you with specialist bridging lenders across the UK who understand mixed-use assets. We help you shape the case, from works schedules to exit evidence, and negotiate terms aligned to your timelines. If you are ready to explore options, speak to a Kandoo expert today and get indicative terms tailored to your project.

Next step: Request an illustration with interest, fees and a draft timeline.

Important information

This guide is general information, not advice. Terms depend on your circumstances, property and market conditions. Bridging finance is secured against your property and may be repossessed if you do not keep up repayments. Always seek independent legal and tax advice.