Bridging finance for multi-unit conversions

Why smart converters use bridging in 2025

Bridging finance has become the pragmatic choice for UK buyers turning buildings into multiple units. If you are bidding at auction, facing a chain break or eyeing a change of use, the clock is rarely on your side. Bridging steps in where speed and flexibility matter. Facilities can be agreed in days, secured on residential, commercial or mixed‑use assets, and tailored to include refurbishment funding alongside the purchase price.

Specialist lenders typically advance up to 70-75% loan to value on acquisitions, with further drawdowns to fund works. Terms are short - often 1-12 months, with some lenders stretching to 24-36 months - because the intention is to refinance onto a cheaper long‑term mortgage or sell once the uplift is realised. Crucially, many providers will consider lending before full planning consent, underwritten against the asset and a credible post‑conversion value supported by professional reports.

For multi‑unit freehold blocks, HMOs and commercial‑to‑residential plays, these features are decisive. Lenders recognise the value unlock as units complete and let. That is why you will see product guides referencing MUFB valuations that blend bricks‑and‑mortar with income evidence after works. On the ground, that can be the difference between securing a Victorian terrace in London for flats, converting an office over retail in a northern city, or moving quickly on a Bristol warehouse while permissions progress.

Understanding APR is not just about percentages - it is about what you pay in real pounds over the life of the loan.

Smaller lenders and specialist funds dominate deals under £5m across England, Wales and Northern Ireland. They bring hands‑on underwriting and tolerance for quirks like split titles, short leases or uninhabitable property. Expect robust checks on planning status, HMO licensing and building regulations. Come prepared with a professional team and a well‑spelled‑out exit - bridge to refurb, then bridge to term or a sale - and you will streamline approvals.

Bridging is not the cheapest money in the market, but in 2025 competition has tightened pricing and fixed‑rate options are more common. With transparent fees and a sensible timeline to refinance, many investors find the incremental cost outweighed by the ability to secure the deal, start the works and capture the uplift.

A simple principle applies: speed plus flexibility can equal value. If the numbers stack, bridging can get you from offer accepted to units marketed while others are still waiting for bank credit committees.

Who benefits most from this route

If you are an investor or developer needing to move fast - especially at auction or on an off‑market opportunity - bridging is designed for you. Landlords pursuing multi‑unit freehold blocks or HMO conversions often use it to acquire and commence works, then refinance to specialist MUFB mortgages once units are completed and let. First‑time converters can be eligible with a credible contractor and project manager in place, while experienced operators will value staged drawdowns and monitoring that match build schedules.

Those managing planning risk or change of use will find pre‑planning bridging particularly useful. Buyers of mixed‑use or vacant stock that conventional lenders will not touch until habitable also benefit. If your exit is realistic and you can evidence costs, timelines and demand in your local market, bridging can provide the certainty to proceed.

Your funding choices at a glance

1. Bridging-to-refurb: purchase plus staged works funding, then refinance on practical completion.

2. Bridging-to-term: purchase and light works, then move to a MUFB or buy-to-let mortgage.

3. Bridge with planning: acquire before consent, fund feasibility, refinance post‑approval.

4. Heavy refurbishment bridge: larger drawdowns for structural reconfiguration and utilities.

5. Bridge-to-sale: acquire, convert and sell units, repaying the facility from proceeds.

Costs, timing and outcomes - what to expect

Are you likely to qualify

Eligibility focuses on the asset, viability and exit. Lenders will assess the purchase price, scope of works, build costs, timelines and the likely value uplift once complete. Expect scrutiny of legal title, any existing leases and planning position, including whether your local authority’s policies support your intended use. For HMOs, licensing expectations vary by authority, and London borough rules often differ from smaller councils. You will need a professional team and a track record or, for first‑timers, strong support from an experienced contractor and project manager.

Income and credit history matter, but bridging is primarily asset‑led. If cashflow is tight during works, many borrowers choose interest roll‑up rather than monthly payments. Lenders will require contingency in your budget, suitable insurance and evidence of demand where you plan to let or sell. Kandoo can help you position the application correctly, packaging valuations, build schedules and exit options so the lender has a clear route to yes.

From offer accepted to refinance - the steps

1. Scope the project and exit - refinance or sale confirmed.

2. Get terms - headline LTV, rate, fees, works facility.

3. Appoint valuation and legal - title and planning diligence.

4. Finalise build budget - contingency and timeline agreed.

5. Complete - funds drawn to purchase the property.

6. Draw down works tranches - monitored by lender or QS.

7. Practical completion - units let or marketed for sale.

8. Refinance to term or repay from sales proceeds.

Advantages and trade‑offs

Read this before you press go

Bridging can be arranged quickly, but preparation still wins. Title issues, historic leases, party wall matters and restrictive covenants often surface late and slow completion. Build budgets should include a realistic contingency for materials and labour, with supplier quotes that match your schedule. Planning and licensing can move at different speeds across GB, so factor local authority lead times and any pre‑commencement conditions into your programme. Keep a sharp eye on sales or letting demand and consider seasonality in student or city‑centre markets. Above all, be precise about your exit and allow time for valuation and legals on the refinance. Clarity today reduces risk tomorrow.

If not bridging, then what

1. Development finance - longer terms for heavy construction and ground‑up builds.

2. Specialist MUFB mortgage - for stabilised, fully let blocks post‑works.

3. Secured business loan - smaller top‑ups for light refurb where timing is less critical.

4. Second charge bridge - leverage existing equity on another property.

5. Cash investors or JV - equity partners to reduce leverage and interest costs.

Frequently asked questions

Q: How much can I borrow for a multi‑unit conversion? A: Many lenders offer up to 70-75% of the purchase price, with additional staged funds for refurbishment. Larger schemes may use hybrid valuations that reflect income once units are completed.

Q: Can I get a bridge before planning is granted? A: Yes. Several UK lenders will fund pre‑planning for credible change‑of‑use projects, underwritten against the asset and supported by professional reports and a realistic exit.

Q: What is a sensible exit strategy? A: Common routes are refinance to a specialist MUFB or buy‑to‑let mortgage once units are let, or a sale of the completed units. Lenders will test this at application.

Q: Are bridging rates fixed or variable? A: Both exist. Fixed rates are increasingly available in 2025, providing cost certainty during works. Always compare the total cost of funds, not just the headline rate.

Q: How fast can I complete? A: With a prepared file, valuation access and responsive legals, completion in one to three weeks is realistic. Auction purchases can be aligned to 28‑day deadlines.

Q: Do first‑time developers qualify? A: Often, if the team and plan are strong. Lenders may require enhanced monitoring, robust contingencies and evidence of experienced contractors and professionals on the project.

How Kandoo helps you move first

Kandoo is a UK‑based retail finance broker that connects you with specialist bridging lenders active across GB. We package the deal, stress‑test exits and coordinate valuations and legal work so funding lines up with your build schedule. Speak to us for indicative terms and a clear path from acquisition to refinance.

Important information

This article is for information only and does not constitute financial advice. Rates, criteria and product availability change. Always seek independent advice and consider tax, planning and legal implications before committing to any finance. Your property may be repossessed if you do not keep up repayments.