If you’re coming to the end of your bridging loan term, you might be wondering about converting it to a mortgage.
It’s a common question, but there’s actually a key point that needs clearing up – bridging loans and mortgages are completely separate financial products, and you can’t normally convert one into the other.
What you can do, however, is refinance your bridging loan to a longer-term mortgage.
Whether you took out a bridging loan for an auction purchase, to break a property chain, or to fund a renovation project, understanding your options for longer-term finance is essential.
Let’s look at how you can move from your bridging loan to a mortgage, what you’ll need to consider, and how to plan ahead for the best outcome.
The Difference Between Bridging Loans and Mortgages
Bridging loans and mortgages serve quite different purposes in property finance.
Think of a bridging loan as a sprint – it’s quick, short-term lending designed to help you complete a property purchase or project when speed matters. They usually run from a few months up to two years, with most lasting less than 12 months.
Mortgages, on the other hand, are more like a marathon. They’re long-term loans, often running for 25 years or more, with structured monthly repayments spread over time. They come with lower interest rates than bridging loans because they’re less risky for lenders.
You’ll find the application process differs too.
Bridging loans focus mainly on the property’s value and your exit strategy – how you’ll pay back the loan. Mortgage lenders look more closely at your income, outgoings, and ability to make regular monthly payments over many years.
That’s why you can’t simply ‘convert’ one to the other – they’re fundamentally different products with their own distinct requirements and purposes. And also they are mostly provided by different styles of lender.
When your bridging loan ends, you’ll need to apply for a mortgage separately, meeting all the standard mortgage lending criteria. It’s a new application, not a conversion of your existing loan.
Read more: Understanding Bridging Loan Criteria & Eligibility
Common Scenarios
Let’s look at real-world situations where people move from bridging loans to longer-term finance.
You’ll often see this with auction purchases, where buyers need to complete within 28 days. They’ll use an auction bridging loan to secure the property quickly, then refinance to a mortgage once they own it.
Property renovations are another prime example.
Say you’ve bought a house that needs substantial work – mortgage lenders won’t consider it until the kitchen and bathroom are fitted. A bridging loan lets you buy the property and fund the improvements.
Once the work’s done and the property’s mortgageable (and worth more), you can refinance with a standard mortgage at a better rate.
For commercial property buyers, commercial bridging finance offers a way to snap up business premises quickly. Once you’ve secured the property and perhaps carried out improvements or secured tenants, you can refinance to a commercial mortgage with more favourable terms.
Let’s talk bridging loans!
Your Options When Your Bridging Loan Term Ends
As your bridging loan end date approaches, you’ll need to consider several options. Let’s look at what’s available and what each path involves.
Refinancing to a Standard Mortgage
Moving to a standard mortgage is often the ideal path forward. You’ll benefit from lower interest rates and manageable monthly payments spread over a longer term. But you’ll need to start planning this move well ahead – at least three months before your bridging loan ends.
Mortgage lenders will want to see proof of your income, usually through three months of bank statements and payslips, or two to three years of accounts if you’re self-employed. You’ll also need a good credit score and proof that you can afford the monthly payments.
The property needs to be habitable when the lenders’ valuer visits.
This means having a working kitchen and bathroom, being weather-tight, and meeting basic safety standards. If you’ve been renovating, make sure these elements are complete before applying.
Extending Your Current Bridging Loan
Before looking at a new bridging loan, check if your current lender will offer an extension.
Many lenders will consider this if you’ve kept within your loan terms and can show good reason for needing more time. You might need this if your property sale is taking longer than expected or if project completion has been delayed.
An extension can often work out cheaper than arranging a new loan.
Your lender will want to see:
- Why you need more time
- Your updated exit plan
- Evidence that you can afford the extended term
Refinancing with Another Bridging Loan (Re-bridging)
If an extension isn’t possible, you might need to arrange another bridging loan – known as re-bridging. This could be necessary if you need significantly more time than a simple extension would provide, or your lender declines your request.
Re-bridging isn’t ideal as you’ll continue paying higher interest rates, but it can buy you more time if needed. Lenders will want to understand why your original exit plan hasn’t worked and see a clear strategy for how you’ll repay the new loan.
When applying for a re-bridge, you’ll need:
- A detailed explanation of why additional time is needed
- A revised, realistic exit strategy
- Proof that you can afford the new loan
- Evidence that the property value supports further borrowing
Keep in mind that re-bridging will mean new arrangement fees and possibly higher interest rates than your original loan.
That’s why it’s worth exploring all mortgage options first, even if your circumstances aren’t straightforward. A specialist broker can often find mortgage lenders who’ll consider cases that high street banks might decline.
Planning Your Exit Strategy
Success in moving from a bridging loan to a mortgage comes down to planning ahead.
Borrowers should start preparing their exit around three to six months before their bridging loan ends – and for good reason.
The mortgage application process takes time, even when everything goes smoothly.
You’ll want to begin your mortgage search about four months before your bridging loan ends. This gives you enough time to find the right deal, complete the application, and handle any unexpected issues that might pop up.
Before you start applying, get your paperwork in order.
Pull together your last three months of bank statements, gather proof of your income, and make sure your tax returns are up to date. If you’re self-employed, you’ll need your business accounts too. Having these ready speeds up the process and shows lenders you’re well-prepared.
Watch out for common stumbling blocks. One of the biggest is assuming your property will be worth a certain amount after renovations.
Get a valuation early on – this helps you understand exactly what mortgage amount you can aim for. If the value comes in lower than expected, you’ll have time to adjust your plans.
Another frequent issue is forgetting about the ‘6-month rule’.
Many mortgage lenders want you to have owned a property for at least six months before they’ll offer a remortgage.
This applies to residential properties and buy to let properties.
If this affects you, you might need to look at specialist lenders who are more flexible with this requirement.
Remember that different lenders have different criteria. What works for one might not work for another. That’s where expert advice really helps – a broker who knows the market can point you towards lenders more likely to accept your application.
Meeting Mortgage Lender Requirements
Moving to a mortgage means meeting stricter lending criteria than you had with your bridging loan.
Your property needs to meet certain standards.
It must be habitable, with a working kitchen and bathroom, sound roof, and proper utilities connected. lenders won’t consider properties mid-renovation – they’ll want to see everything finished.
They’ll send a surveyor to check the property’s condition and confirm its value.
Income requirements vary between lenders. As a rough guide, most will lend between 4 and 4.5 times your annual income. They’ll look at your basic salary, but should also consider bonuses, commission, or rental income. If you’re self-employed, you’ll usually need at least two years of accounts to prove your income.
Getting your paperwork right makes a big difference.
You’ll need:
- Bank statements for the last three months
- Proof of income (payslips or accounts)
- ID and proof of address
- Details of any other loans or financial commitments
- Evidence of your deposit if you’re increasing the loan amount
Your credit score matters, so check your credit report before applying – you might spot issues you can fix. Even small things like making sure you’re on the electoral roll can help. If you have missed payments or CCJs, some specialist lenders might still consider your application, though rates could be higher.
For residential mortgages lenders look closely at affordability. They’ll check your regular outgoings, including bills, other loans, and living costs. They want to be sure you can comfortably afford the mortgage payments, even if interest rates rise.
Affordability is not important for a buy to let mortgage, but you’ll still need to prove a minimum level of earned income.
How a Specialist Broker Can Help
Moving from a bridging loan to a mortgage isn’t always straightforward, which is why it’s a good idea to work with a specialist broker.
A broker who understands both bridging and mortgage markets can make a real difference to your refinancing journey.
They’ll look at your whole situation – not just bits of it.
While high street banks might only see the numbers, a specialist broker understands the story behind them. They know which lenders will consider different scenarios, whether you’re finishing a renovation project or waiting for a property sale.
Brokers work with a wide range of lenders, including private banks and specialist mortgage providers you might not find on the high street. This matters because different lenders have different appetites for risk. Some are happy to lend on properties that others won’t touch, while others specialise in complex income structures or unusual properties.
A good broker will also handle the paperwork and chase things up on your behalf. They’ll package your application in a way that highlights its strengths to lenders, and they’ll know how to address any potential concerns upfront.
This speeds up the process and increases your chances of approval.
Steps to Take Now
If you’ve got a bridging loan, here’s what you should do right away:
Start by checking your bridging loan end date and mark key dates in your calendar. You’ll want to begin your mortgage preparations at least three to four months before your bridge ends.
Sort out your paperwork.
Get those bank statements, proof of income, and any renovation documents organised. If you’re self-employed, speak to your accountant about preparing your business accounts.
Take a good look at your property too. What work needs finishing before it’s mortgageable? Make a list and set realistic completion dates. Long-term mortgage lenders only lend against habitable houses, so everything needs to be in place before the mortgage can start.
Talk to a specialist broker sooner rather than later. Even if you’re months away from needing a mortgage, early advice helps you prepare properly and avoid last-minute rushes.
And Finally
Remember, while you can’t directly convert a bridging loan to a mortgage, you can plan a smooth transition between the two. The key lies in understanding they’re different products and preparing well in advance for the change.
Getting the right advice makes all the difference.
An experienced broker will guide you through the process, help you avoid common pitfalls, and find the most suitable long-term finance for your situation. The earlier you start planning, the more options you’ll have available.
FAQ
You have several options: extending your current bridging loan, arranging a new bridging loan (re-bridging), or speaking to your lender about alternative arrangements.
If you over-run your end date then you will be charged a default interest rate. This is to be avoided as it’s a lot more expensive.
Read more: Can You Pay Off a Bridging Loan With Another Bridge?
Yes, mortgage lenders will check your credit score. Having a good credit history will give you access to better rates and more lenders
Related reading: Do You Need a Good Credit Score for a Bridging Loan?
If renovations aren’t complete, you might need to extend your bridging loan or arrange a re-bridge. Mortgage lenders require the property to be habitable with a working kitchen and bathroom.
Related reading: Bridging Finance for Unmortgageable Properties
While not mandatory, a broker can access more lenders, especially those who specialise in cases moving from bridging finance. They can often find better rates and terms.
Specialist lenders can consider various income sources, including self-employment, contracts, or international income. A broker can help find lenders who understand complex income structures.
Yes, mortgage lenders will require their own valuation, even if you had one for your bridging loan. This helps them confirm the current market value.
Commercial mortgages have different criteria, often focusing on business performance and property type. They might take longer to arrange than residential mortgages.
Yes, but you’ll need specialist lenders. Some mainstream lenders avoid unusual properties, but others specialise in non-standard construction types.
Related reading: What is a Bridging Loan Secured Against?