Bridging loan repayment (called an “exit strategy”) must be planned before you borrow, as lenders won’t approve you without a solid and realistic repayment plan. Most people repay by selling property or refinancing to a mortgage but you need sensible timeframes and backup plans.
You’re thinking about a bridging loan, but there’s one question that should keep you awake at night.
It’s not “can I get approved?”
It’s
“how exactly am I going to pay this back?”
Unlike your mortgage with its gentle monthly payment plan, bridging loans work completely differently.
Here’s what worries most people – you’ve heard the horror stories.
Someone needed quick property finance, got approved easily, then couldn’t repay when the time came. The lender repossessed their property, and years of equity vanished overnight.
But here’s the thing – these disasters happen when people focus on getting the loan without planning their way out of it. Lenders call this your “exit strategy,” which sounds dramatic but just means “how you’ll pay us back.” They won’t even approve you without a solid plan, and that’s actually protecting you.
When you understand exit strategies before you borrow, you’ll make smarter decisions.
You’ll choose the right loan structure, pick the right lender, and sleep better knowing exactly how you’ll repay every penny. Because the cheapest bridging loan rate means nothing if you can’t afford to get out of it.
What Lenders Mean by ‘Exit Strategy’
When your broker mentions “exit strategy” it’s just lender jargon for “how are you planning to pay us back?“
Understanding why they’re obsessed with this will help you get approved and avoid problems later.
Think about it from their perspective.
Bridging finance is only for the short term, you’re borrowing money for maybe six to twelve months, normally without making any monthly payments. The lender gets nothing back until the very end, when you hand over the entire loan amount plus interest in one lump sum.
That’s a big ask, so they need to know exactly where that money’s coming from.
This isn’t something you can figure out later. Before any lender releases funds, they want to see a detailed plan showing how you’ll repay them. A weak exit strategy like “I’ll probably sell the property” won’t cut it.
They want specifics – which property, realistic timescales, market conditions, backup plans. The stronger your exit strategy, the more likely you’ll get approved with better rates.
How Interest Works (Before We Talk Repayment)
Before we get into how you’ll actually repay your bridging loan, you need to understand how the interest clock ticks.
Unlike your mortgage, every day counts when it comes to cost.
Bridging loan interest gets quoted as a monthly rate – usually between 0.5% and 2% per month.
Most bridging loans use “rolled-up” interest, which means the interest gets added to your loan balance each month. So if you borrow £250,000 at 1% monthly interest, after six months you’d owe roughly £265,000. You don’t choose this – it’s how most bridging loans work because there are no monthly payments.
Here’s the key thing – every extra day you hold the loan costs money. Your exit strategy timing isn’t just about having a plan. You need realistic timeframes that actually work.
Your Exit Route Options
Most people plan to sell a property to repay their bridging loan, but smart borrowers always have a Plan B. Property sales can fall through, mortgage approvals can get delayed, and markets can shift.
Property Sale (Most Common)
Selling property is by far the most popular exit route, and for good reason. You might sell the property you’ve just bought (common with auction purchases or quick renovations), or you could sell another property you already own.
The key is being realistic about timing and market conditions.
If you’re selling the property you bought with the bridging loan, make sure you’ve factored in any renovation time, planning permissions, or legal complications. A six-month exit strategy can easily become twelve months if you hit unexpected problems.
Related: Property Refurbishment Bridging Loans: Your Guide to Renovation Finance
Refinancing to a Mortgage
This route works well when you’re buying a property that doesn’t qualify for a normal mortgage yet. Maybe it needs renovation or you’re self-employed and need time to get your paperwork sorted.
Once the property’s ready and your circumstances improve, you can refinance onto a standard mortgage.
The catch? Mortgage applications take time, and you’ll need to meet normal lending criteria. If your income situation hasn’t improved or property values have dropped, you could get stuck.
If your exit route is via refinancing then expect the lender to ask detailed questions about these, they may even request a DIP or mortgage offer.
TOP TIP: It can be more difficult to get a long-term mortgage within the first six months of buying a property. Speak to your broker about this before you make the initial purchase.
Read more: Can You Convert a Bridging Loan to a Mortgage?
Alternative Asset Sales
Sometimes your exit strategy involves selling something completely different – another property, business shares, or even a business itself.
Lenders are usually fine with this as long as you can prove the asset exists and show realistic sale values.
One client used their bridging loan to buy a development site, planning to repay from selling their main residence. When the house sale got delayed, they sold some commercial property instead.
Having multiple assets gives you options.
Do Lenders Mind Where You Get the Money From?
You might think lenders only care about getting their money back, but when it comes to your exit strategy, they’re more interested in reliability than the specific source.
The question isn’t “where’s the money coming from?” – it’s more “how certain are we that it’ll actually arrive?“
Property sales and refinancing are the easiest exit strategies to get approved because lenders understand them. But that doesn’t mean alternative sources won’t work – you just need to prove they’re realistic and timely.
Got a substantial investment portfolio and only need to sell 20% of it? Most lenders will accept that.
Planning to sell part of your crypto holdings worth £2 million to repay a £300,000 loan? Progressive lenders are increasingly comfortable with this, especially if you can show stable holdings over time.
Business sales can work brilliantly if you’ve got interested buyers and realistic valuations. Even inheritance makes sense if there’s a clear timeline and proper legal documentation.
The key is showing the money will definitely be available when you need it.
Where lenders get nervous is anything that depends on luck, perfect timing, or someone else’s decisions.
- Waiting for a bonus that might not materialise?
- Planning to time the crypto market perfectly?
- Expecting gambling wins?
These aren’t exit strategies – they’re hopes.
The best approach is transparency. Explain your source clearly, provide evidence of the asset’s value, and show you understand the liquidation process. Work with a broker who knows which lenders are open-minded about non-traditional exit routes.
Remember, you often don’t need to liquidate everything – just enough to repay the loan safely and on time.
When Your Exit Strategy Doesn’t Work
If your property sale falls through or gets delayed, don’t bury your head in the sand. Call your lender immediately – they’d much rather work with you on a solution than start repossession proceedings.
Here’s what most people don’t realise – lenders really don’t want to extend the bridging loan term. They’re designed for short-term lending, and keeping you on the books for years doesn’t suit their business model.
Extensions are possible but expensive, often with penalty rates and hefty fees.
A better option can be “rebridging” – essentially taking out a new bridging loan to repay the first one. This gives you a fresh start with new terms, often at better rates than an extension.
Your broker can arrange this if your exit strategy just needs more time rather than a complete rethink.
The worst-case scenario is defaulting on the loan. If you genuinely can’t repay and can’t rebridge, the lender can start legal proceedings to recover their money.
This usually means selling the secured property, but it’s a last resort that takes months and costs everyone money.
That’s why communication matters so much. If you’re proactive about problems, most lenders will work with you. If you go silent and miss repayment dates, they’ll assume the worst and act accordingly.
Read more: Can You Extend A Bridging Loan?
Why You Need Professional Help
You wouldn’t perform surgery on yourself, so why would you structure a complex bridging loan without professional help? A good broker doesn’t just find you a loan – they help you plan your way out of it.
Experienced brokers have seen how and exit strategy can go wrong and know how to build in safeguards.
They’ll stress-test your plans, suggest backup routes you hadn’t considered, and choose lenders who’ll work with you if problems arise.
With access to 250+ lenders, they can find options that match your specific exit strategy rather than forcing you into a one-size-fits-all product.
When problems do arise – and they often do in property deals – you want someone in your corner who knows how to negotiate with lenders. Brokers manage these relationships daily and know which lenders are flexible, which are difficult, and how to present solutions that get approved.
The cost of professional advice is minimal compared to the cost of getting your exit strategy wrong.
One poorly structured bridging loan can cost you tens of thousands in unnecessary interest and fees.
Your Next Steps
Before you start shopping for bridging loan rates, nail down your exit strategy. The cheapest loan is worthless if you can’t repay it when the time comes.
Work with an experienced broker who’ll help you plan both your entry and exit, stress-test your assumptions, and choose lenders who’ll support you throughout the process.
Remember, the best bridging loan isn’t the one with the lowest rate – it’s the one that gets you from where you are to where you want to be, safely and affordably.
Get Your Bridging Loan Quote Today
Speak to a bridging finance specialist now. Our initial consultation is free and without obligation – we’ll assess your requirements and explain your options clearly.
Call us on 0330 030 5050
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