Commercial Mortgage vs Bridging Finance: Which Do You Need?

Both are secured against commercial property, but they solve different problems. Choosing the wrong one costs money; using them together in the right order can be the smartest route of all.

Commercial mortgage in a sentence

Long-term, lower-cost borrowing to buy or refinance property you intend to hold, repaid monthly over 5–25 years.

Bridging finance in a sentence

Short-term, higher-cost borrowing to secure property quickly or fund a transition, repaid in one sum within 3–24 months from a sale or refinance.

Side by side

• Speed: bridging completes in one to three weeks; a commercial mortgage takes six to twelve.
• Cost: bridging is priced monthly and is several times more expensive per year; commercial mortgages are priced annually and are far cheaper over time.
• Repayments: bridging usually has no monthly payments (interest is rolled up); a mortgage has monthly payments from day one.
• Property condition: bridging lenders will fund property that is not yet lettable or habitable; mortgage lenders generally will not.
• Assessment: bridging is assessed on value and exit; a mortgage is assessed on affordability, rental income and the borrower's business.

When you need a commercial mortgage

You are buying premises to trade from or an investment property with a tenant in place, the property is in lettable condition, you have time on your side, and you plan to hold it for years.

When you need bridging

You are buying at auction, the property needs work before a mortgage lender will touch it, you need to move faster than a mortgage allows, or you are waiting on a sale or refinance elsewhere.

When you need both

The classic route: buy a tired or vacant commercial unit with bridging, refurbish or let it, then refinance onto a commercial mortgage at the improved value. Done well, the mortgage repays the bridge and the higher valuation reduces the cash you leave in the deal.

Get the sequence right

DNA Finance arranges both products and, crucially, plans the exit from the bridge onto the mortgage before the bridge is taken. That is what keeps the strategy safe and the total cost down.