Bridging vs term mortgage: which funds your deal?

The honest answer is that the exit decides the entrance. If the plan is to add value and refinance or sell, bridging usually wins despite costing more. If the plan is to buy and hold as-is, a term mortgage usually wins despite being slower.

What bridging buys you

Speed (weeks, not months), tolerance (tired or unmortgageable property, single-title blocks, auction timescales) and flexibility (refurb costs funded in staged drawdowns, interest rolled up so nothing is paid monthly). Typical pricing: around 0.9% per month plus a 2% arrangement fee — run the true cost in our bridging calculator. It’s expensive money with a deadline: the loan must be cleared by a refinance or sale, so the exit has to be modelled before you enter.

What a term mortgage buys you

Cheap, stable money — but on the lender’s terms. The property must be lettable on day one, the timescale suits the lender not the vendor, and the loan is capped by the ICR stress test as well as the value. One nuance worth knowing: unusual assets — a block on a single title, larger HMOs — need specialist lenders who price higher than mainstream buy-to-let. Sometimes the cheapest long-term route is to bridge first, fix the thing that makes the asset “specialist” (split the title, finish the conversion), then refinance onto mainstream terms typically 1–1.5% cheaper.

The rule of thumb

Value-add with a clear exit → bridge it, and price the exit first. Stabilised income, no works → term mortgage, and let the ICR tell you the maximum loan. If you’re between the two, model both routes side by side — the Deal Shaper prices the bridge, the refinance and the stress test in the same pass.