How to Work Out Your Bridging Loan LTV (Loan to Value)

Learn how to calculate bridging loan LTV with our expert guide.

Get suggestions to improve your loan to value ratio and secure better lending terms.

How to Work Out Your Bridging Loan LTV (Loan to Value)

Learn how to calculate bridging loan LTV with our expert guide.

Get suggestions to improve your loan to value ratio and secure better lending terms.

When you’re looking at bridging finance, understanding your loan-to-value (LTV) ratio is one of the most useful things you can learn.

It’s a key metric that affects both how much you can borrow and what you’ll pay for your bridging loan.

In this guide, we’ll break down exactly what LTV means for bridging loans, show you how to calculate it yourself, and explain what different LTV ratios mean for your borrowing prospects.

You’ll learn why bridging lenders place such emphasis on LTV ratios, what counts as a good LTV for different types of projects, and how to improve your chances of approval.

Understanding LTV for Bridging Finance

Bridging loans assess Loan-to-Value (LTV) differently from standard mortgages. While both measure the relationship between loan amount and property value, bridging lenders take a unique approach.

How LTV Works in Practice

Take this example:

  • Property price: £400,000
  • Your cash: £100,000
  • Required loan: £300,000
  • LTV: 75%

The Property-First Approach

Bridging lenders focus primarily on the property’s value rather than your income or credit history.

This makes sense because:

  • The loan is short-term
  • The property serves as the main security
  • Quick sale potential matters more than long-term affordability

Maximum LTVs by Property Type

Different properties come with different lending limits:

Residential Properties (light refurbishment):

  • Up to 75-80% LTV
  • Better rates for lower LTVs
  • Quick-sale potential helps secure higher LTVs

Commercial Properties:

  • Usually 65-70% LTV
  • Lower limits due to smaller buyer pool
  • Sale time can be longer

Land:

  • With planning permission: Up to 65% LTV
  • Without planning: 50% LTV or lower
  • Reflects increased uncertainty and risk

Boosting Your LTV

You might secure a higher LTV by:

  • Offering additional property as security
  • Demonstrating clear exit strategy
  • Showing previous bridging loan experience
  • Having strong development plans

This approach particularly helps with development projects where higher initial funding lets you maximise project potential.

The clearer your exit strategy and the stronger your security, the more likely you are to achieve the maximum available LTV for your property type.

Related reading: How Much Can I Borrow on a Bridging Loan?

Calculating Your Bridging Loan LTV

Working out your bridging loan LTV isn’t complex once you know the method.

Start with your property’s current market value (or purchase price), then divide the amount you need to borrow by this figure.

Multiply the result by 100, and you’ll have your percentage figure.

Here’s a simple example:

You’ve found a commercial property for £500,000 and have £150,000 in cash.

You’ll need to borrow £350,000.

  • £350,000 ÷ £500,000 = 0.7
  • 0.7 x 100 = 70% LTV

£350,000 is 70% of £500,000.

If you’re buying a property to renovate, lenders will look at both its current value and the estimated value after works (known as the gross development value or GDV). For instance, if you’re buying a house for £200,000 that will be worth £300,000 after renovation, some lenders might offer terms based on the higher figure.

This is the method used for most property development loans.

Watch out for common mistakes:

Don’t forget to include all costs in your loan amount, such as lender fees and interest payments.

Also, be realistic about property values – lenders will carry out their own valuations, and overoptimistic estimates can lead to disappointment.

If you’re unsure about your calculations, it’s worth speaking with a broker who can check your figures and advise on which lenders might offer the LTV you need. They’ll also know which lenders are more flexible with their LTV calculations for different property types.

LTV Calculator

Want to know how much you could borrow with a bridging loan?

Our simple LTV calculator gives you a quick estimate based on your property’s value. Remember, the actual amount you can borrow depends on factors like property type, location and exit strategy. This tool provides a useful starting point for your planning.

Just enter your property value and preferred LTV choice to get started.

Property Value: £0
Deposit Amount: £0
Loan Amount: £0
LTV: 0%

Let’s talk bridging loans!

Book your free consultation today and let’s discuss how we can help you achieve your property goals.

Different LTV Limits for Different Projects

When it comes to bridging finance your maximum loan to value percentage will vary significantly based on what you’re planning to do with the property.

Whether you’re buying a house to renovate, securing a retail unit, or starting a ground-up development, understanding these differences helps you plan your finances more effectively.

Let’s look at what you can expect for each type of project.

Residential Bridging

Residential properties often offer the best loan-to-value options for bridging finance.

For a standard residential property in good condition, you might find loans up to 75-80% LTV, particularly if you’re using it as a quick solution between house moves or for an auction purchase.

Light refurbishment projects – where you’re updating kitchens, bathrooms, or doing general decorating – usually stay within similar LTV boundaries. Lenders see these as lower risk because the work won’t affect the building’s basic structure.

However, when you move into heavy renovation territory – like converting a house into flats or adding extensions – LTV limits often drop to 70-75%. This reflects the extra risk during the construction phase.

Some lenders will look at the projected end value, but they’ll want to see detailed plans and costings before making an offer.

Commercial Property

Commercial property bridging tends to come with stricter LTV limits.

Most lenders cap their lending at 70% LTV for straightforward commercial buildings in good locations. These limits reflect the more specialised nature of commercial property and potentially longer selling times.

Mixed-use properties, like shops with flats above, can sometimes achieve higher LTVs. Lenders often view these as less risky because they have two potential income streams and can be split if needed. The residential element can make them easier to sell.

The type of commercial property will make a difference. Modern office buildings in business districts might secure better LTVs than specialised industrial units or retail properties in secondary locations.

Lenders look at factors like local demand and how easily the property could be re-let or sold.

Development Finance

Development projects have their own LTV structure and calculations.

For land with planning permission, you might find loans at 60-65% LTV of the land value.

New build projects often work on a combination of land value and build costs. A lender might offer 70% of land costs plus 100% of build costs, released in stages as work progresses. They’ll look closely at your experience and the project’s viability.

Development exit finance – used when your project’s nearly complete – can be used to replace the initial development loan, at a lower interest cost. It’s a strategic loan that helps developers shift from higher-cost development loans to more favourable terms, typically when a project is 90% complete or more.

Developers can borrow up to 80% of the current value This type of bridging loan helps developers release equity before selling all their units, letting them move on to new projects sooner.

Read more: How to Refinance Your Unfinished Development Project

How Property Valuation Affects Your LTV

The amount you can borrow through a bridging loan depends on your property’s value. But there’s more to property valuation than meets the eye.

Professional Valuations Are Key

You’ll need a professional valuation from the lender’s approved surveyor – personal estimates or estate agent valuations won’t count. These surveyors look at two main figures:

  • Open Market Value: What your property should sell for with proper marketing
  • Forced Sale Value: What it might fetch in a quick sale scenario

How Lenders Use These Values

Some lenders base their calculations on the forced sale value, which can be 25-30% below market value. For example:

Market Value: £500,000
Forced Sale Value: £375,000

If your lender uses forced sale value, they’ll calculate your maximum loan amount using the lower figure – even if you’re confident of achieving the full market price.

What Affects Your Valuation?

Surveyors examine many aspects of your property, including:

  • Structural condition
  • Presence of damp
  • Working facilities (kitchen, bathroom)
  • Local market conditions
  • Similar recent sales

Properties missing essential facilities like working kitchens or bathrooms will receive lower valuations, which directly impacts your borrowing capacity.

Time Matters

Valuations have a limited shelf life – usually three months.

After this, you might need a fresh valuation, especially if:

  • Your property is being renovated
  • Local property prices are changing quickly
  • Your loan completion takes longer than expected

Challenging a Valuation

While surveyors work independently, you can challenge their valuation if you have strong evidence, such as:

  • Very recent sales of similar properties nearby
  • Documentation of improvements made since the valuation
  • Evidence of significant changes in local market conditions

Remember, surveyors must justify their figures to lenders, so any challenge needs solid backing.

Desktop Valuations and AVMs

Some lenders accept desktop valuations or Automated Valuation Models (AVMs) for certain bridging loan applications, particularly where speed is essential or the loan amount is relatively low compared to the property value.

Desktop Valuations Explained

A desktop valuation involves a qualified surveyor assessing your property without visiting it in person.

They’ll analyse:

  • Property sale records
  • Land Registry data
  • Local market trends
  • Google Street View images
  • Similar properties in the area

While quicker and cheaper than physical valuations, desktop valuations often result in more conservative estimates. Lenders typically offer lower LTV ratios when using this method.

Automated Valuation Models (AVMs)

AVMs use computer algorithms and big data to estimate property values.

They pull information from:

  • Previous sale prices
  • Recent local transactions
  • Property characteristics
  • Market trends
  • Postcode data

When Are They Used?

Desktop valuations and AVMs might be suitable if:

  • You need a quick decision
  • The property is in a built-up area with lots of similar properties
  • You’re borrowing a smaller percentage of the property value
  • The property is standard construction with no obvious issues

Limitations to Consider

These methods have some drawbacks:

  • They might miss recent property improvements
  • Unique or unusual properties are harder to value accurately
  • They can’t spot current structural issues
  • Some lenders won’t accept them for higher-value loans

Remember, even if a lender initially accepts a desktop valuation or AVM, they might still require a full physical valuation before completing your loan, especially for larger amounts or more complex cases.

Using Additional Security to Improve LTV

Adding extra security to your bridging loan can significantly increase how much you can borrow. Let’s look at your options, starting with the most common approach – cross-charging.

Cross-Charging Explained

Cross-charging means using equity in your other properties to support a new loan. Here’s an example:

Property you want to buy: £400,000

Maximum standard LTV (70%): £280,000

Your property portfolio:

  • Target property: £400,000
  • Your existing property: £300,000 (no mortgage) Total security: £700,000

With this level of security, lenders might fund your entire £400,000 purchase – sometimes up to 100% of the cost.

Other Forms of Security

Lenders accept various assets as additional security:

Property-Based:

  • Buy-to-let properties
  • Commercial buildings
  • Your main residence (some restrictions apply)

Other Assets:

Personal Guarantees

When borrowing through a company, lenders often ask for personal guarantees from the directors. While these don’t directly affect your LTV, they can help you secure:

  • Better interest rates
  • Higher loan amounts
  • More flexible terms
  • Faster approval

Making It Work For You

Before offering additional security, consider:

  • The risk to your assets
  • Future borrowing needs
  • Exit strategy reliability
  • Cost implications

A broker can help you:

  • Find lenders who accept your type of security
  • Structure your application effectively
  • Negotiate better terms
  • Protect your interests

How to Borrow 100% of Your Purchase Price

You can borrow the entire purchase price through bridge finance – but you’ll need solid additional security to make it happen.

Here’s what you need to know.

What 100% Really Means

When discussing 100% bridging finance, we mean:

  • 100% of the purchase price
  • Not 100% LTV against just the target property
  • Overall LTV usually needs to stay below 70-75%

How It Works: A Real Example

  • Purchase property: £200,000
  • Your existing property: £300,000 (no mortgage)
  • Total security value: £500,000
  • Loan needed: £200,000
  • Overall LTV: 40%

In this case, a lender might fund your entire purchase because the total loan creates a relatively low LTV across all security.

Ways to Secure 100% Funding

Using Property Assets:

  • Equity in properties you own
  • Second charges on mortgaged properties
  • Multiple properties as combined security

Other Options:

  • High-value assets (some lenders)
  • Investment portfolios
  • Business assets

What Lenders Look For

To approve 100% funding, lenders want to see:

  • Clear exit strategy
  • Proof you can repay the loan
  • Strong security position
  • Previous property experience
  • Solid track record (if you’ve used bridging before)

Points to Consider

Before pursuing 100% funding, think about:

  • Higher interest rates than standard bridging
  • Risk to additional security
  • Need for quick exit strategy
  • Impact on future borrowing
  • Additional legal costs

Remember: While 100% funding helps you act fast on opportunities, it puts more of your assets at risk. Make sure your exit strategy is water-tight before proceeding.

Working with a Broker to Optimise Your LTV

A skilled finance broker brings valuable insight when you want to maximise your borrowing potential.

They know which lenders match your specific needs and – most importantly – which ones are actively lending.

How Brokers Help with Property Values

The right broker will:

  • Consider your property’s condition
  • Analyse current market trends
  • Help set realistic value expectations
  • Match you with suitable lenders

This groundwork helps avoid wasted time pursuing unrealistic valuations.

Expert Help for Complex Deals

For more involved projects like:

  • Mixed-use properties
  • Development schemes
  • Multi-unit purchases
  • Non-standard buildings

Your broker can:

  • Structure applications effectively
  • Suggest using multiple security properties
  • Combine different finance types
  • Find specialist lenders who understand unusual properties
  • Negotiate better terms

Getting the Best Results

A good broker will:

  • Review your whole property portfolio
  • Consider all available security options
  • Present your case strongly to lenders
  • Speed up the application process
  • Help you avoid common pitfalls

When choosing a broker, look for:

  • Extensive lender network
  • Experience with similar projects
  • Understanding of current market
  • Track record of successful deals
  • Clear communication style

Remember: The right broker saves you time and often secures better terms than going directly to lenders.

55% or 56%

Understanding how LTV thresholds work can save you money.

Many lenders offer significantly better rates when you borrow at or below certain LTV levels – for example, you might get a much better rate at 55% LTV compared to 56%, or 55.5%

A good broker will structure your loan amount to hit these thresholds exactly. Sometimes, borrowing just a few thousand pounds less can mean substantial savings on your interest rate.

Next Steps

Ready to work out your bridging loan LTV?

Here’s what you need to do:

First, gather your property details, including current value estimates, renovation costs if applicable, and information about any additional security you could offer. Having recent photos of the property helps too.

Then, work out your ideal borrowing amount and calculate the basic LTV you need. Be realistic about property values – remember that lenders will do their own valuations.

If you’re looking at higher LTVs or complex deals, speak with a broker before approaching lenders directly. They’ll help you understand what’s achievable and can often find better terms than you’d get on your own.

Consider your exit strategy carefully – this affects which LTVs might be available to you. Whether you’re planning to sell, refinance, or use other funds to repay the loan, you’ll need evidence to support your plans.

FAQ

For standard residential property, most lenders offer up to 75% LTV. Commercial property usually caps at 65-70% LTV, and land without planning permission might be limited to 50% LTV. You can sometimes achieve 100% of the purchase price by offering additional security.

Related: A Guide to Cross Charge Bridging Loans

Yes, but you’ll need to offer additional security, such as equity in another property. The overall LTV across all security will still need to meet lender requirements, usually around 70-75%.

Read more: Do You Need a Deposit for a Bridging Loan?

Yes, lenders require valuations from their approved surveyors. Your own estimates or estate agent valuations won’t be enough for the formal application.

Read more: Do you need a valuation for a bridging loan?

Once your loan is in place, changes in property value won’t affect your existing loan. However, they could impact your exit strategy, especially if you’re planning to refinance.

Yes, this is called cross-charging. Lenders will look at the total loan amount against the combined value of all properties offered as security.

Read more: A Guide to Cross Charge Bridging Loans

Market value assumes a proper marketing period, while forced sale value estimates what the property might achieve in a quick sale – often 20-30% less than market value.

Development LTVs often work on a combination of land value and build costs. Some lenders also consider the gross development value (GDV) once complete.

Loans from our bridging lenders start from £150,000.

Related reading: How Much Can I Borrow on a Bridging Loan?

Yes, but you’ll need solid evidence, such as recent sales of very similar properties nearby. Working with a broker can help present your case effectively.

Still have more questions?

Just give us a call on 020 3488 5706 to speak with an expert.
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