Below Market Value Bridging Loans: 95% of Purchase Price

A below market value bridging loan lets you complete on a property priced under its open market value without funding the full balance in cash, because the lender sizes the loan against the property's independent valuation rather than only the price you are paying. FD Commercial arranges below market value bridging at up to 95% of the purchase price, subject to 75% of open market value, on residential and commercial property where the loan is above £1,000,000. On smaller loans, from our £250,000 minimum, we arrange it on published lender products that run to 90% of price within 70% of value.

Most lenders price a purchase against whichever figure is lower: the price or the valuation. On a normal purchase those two numbers are the same and the point is moot. On a genuine below market value purchase they are not, and the gap between them is equity you own from the day you complete. A below market value bridge is the product that lets you borrow against that equity on day one rather than waiting six months to refinance and pull it out.

What is a below market value bridging loan?

A below market value bridging loan is short-term finance secured on a property you are buying for less than an independent RICS valuer says it is worth, where the lender lends against the value rather than only the price. Terms run from three to 24 months. Interest is usually retained from the advance or rolled up, and the loan is repaid by refinancing onto a term mortgage once the property has been owned long enough for a lender to value it at the full figure, or by selling it.

The word that matters is genuine. A property is not below market value because the buyer negotiated well, or because an agent said it would fetch more. It is below market value when a surveyor instructed by the lender puts a figure on it that is materially above the agreed price, and when there is a reason for the gap that the lender can write down. Executors want an estate cleared. A receiver wants a debt repaid this quarter. A landlord selling 40 houses in one lot takes less than 40 separate sales would raise. Those are discounts a lender will fund. A price agreed between a father and a son with no valuation behind it is a gift, and it is underwritten as one.

We see around one below market value enquiry a week and roughly a third of them survive the first question, which is "why is the seller accepting this price?". The ones that do are the ones where the answer is boring. Probate, insolvency, a portfolio exit, an auction. The ones that do not are the ones where the buyer has to think about it.

How much can you borrow on a below market value bridging loan?

Up to 95% of the purchase price, subject to a cap on open market value that ranges from 60% to 75% depending on the lender and the asset. Both limits apply together and the lower of the two is the gross loan. The table sets out the structures we place cases on. The loan size line matters: the 95% and 75% structure is one we arrange on loans above £1,000,000, and below that the published market runs a little tighter.

Rates and lender criteria are subject to change. Figures correct at time of publication. Always speak to your broker for up-to-date rates and lending criteria on your specific case.

The last row is the one most buyers forget. If you own another property with equity in it, a lender can take a second charge over that property alongside the first charge on the purchase and lend the whole price. That is not a below market value product, it is cross-charge bridging, and on a strong discount the two can be combined so that the combined loan to value across both properties stays inside 75% while you put no cash in at all.

How do the 95% and 75% limits work together?

The 95% of price limit and the 75% of value limit are two separate ceilings and the loan is set by whichever is lower, which means the size of the discount decides which one binds. On a small discount the value cap binds and the effective percentage of the price you can borrow falls. On a large discount the price cap binds and you get the full 95%. The crossover on a 95% and 75% structure is a discount of 21% below open market value.

Say a warehouse is valued at £2,000,000 but is being sold for £1,600,000 because the vendor needs a fast, unconditional sale. At 95% of the £1,600,000 price the loan is £1,520,000. At 75% of the £2,000,000 value the ceiling is £1,500,000. The lower figure applies, so £1,500,000 is available against a deposit of £100,000, rather than the £400,000 a lender working from price alone would ask for at 75%.

Two things fall out of that table. First, a 5% discount is not a below market value deal in any lender's eyes; it is a normal purchase with a slightly better loan. Second, once the discount passes 21% the deposit barely moves, because the lender is now sizing the loan on price and every extra pound of discount comes off the price and the loan together. The buyer who has done the work to find a 30% discount does not get a bigger loan for it. They get a cheaper property. That is still the better outcome, but it is worth knowing before you negotiate past the crossover on the assumption the lender will fund the difference.

Check both numbers before you agree a price, not after. The enquiries that go wrong are the ones where the buyer has agreed £1,700,000 on a £2,000,000 building assuming 95% and then finds the value cap gives them 88% and a deposit £115,000 larger than they have.

Below market value bridging calculator

Enter the open market value, the price you have agreed and the asset type. The calculator applies both caps, shows which one binds, deducts retained interest and the arrangement fee to give the day-one net advance, and compares the cash you need against a standard bridge at 75% of price. It is a planning tool, not an offer.

The calculator makes the point the headline does not. The 95% is a gross figure. Nobody lends you 95% net. Retain twelve months of interest and a 2% fee and the £1,500,000 gross loan puts £1,299,000 in your hands on completion, so the cash you need is £301,000, not £100,000. That is still £259,800 less than a standard bridge needs on the same building, which is the point of the product, but it is a different number from the one on the lender's product sheet. Servicing the interest monthly instead brings the day-one cash down to £130,000 and adds £14,250 a month to your outgoings, which suits a buyer with rental income from day one and does not suit a buyer refurbishing an empty building.

What counts as a genuine below market value purchase?

A purchase counts as below market value when an independent valuer puts the open market figure materially above the price and there is a documented, arm's-length reason for the difference. Lenders want a minimum discount of around 10% to 15% before they will treat the case as anything other than a normal purchase, and they grade the reason for the discount as carefully as the size of it. The table sets out the sources we see and how lenders treat each one.

One pattern holds across all eight rows. The lender is not asking whether the buyer got a bargain. It is asking whether the price is repeatable, meaning whether the property would sell for the valuer's figure if the lender had to sell it. A probate sale at 20% under value is repeatable because the discount was created by the seller's circumstances, not by the property. A sub-sale where the buyer has flipped a contract for a profit is not, because the lender is being asked to fund the flipper's margin, and the only evidence for the higher value is the person who benefits from it.

Get the reason for the discount in writing from the seller's side before you instruct the valuer. A one-line email from the executor's solicitor confirming the estate is being sold for a fast, unconditional completion is worth more to an underwriter than three pages of comparables from the buyer.

Which lenders offer below market value bridging in the UK?

A small number of specialist bridging lenders publish a dedicated below market value product, and a wider group will assess a genuine discount case by case against open market value without publishing terms for it. MS Lending Group launched a dedicated BMV bridge in August 2026 at up to 90% of the purchase price on residential property within 70% of market value, and up to 80% of the price on commercial property within 60% of the 180-day value, which is the clearest published structure in the market and the basis for the published-product rows in the table above. The 95% of price and 75% of value structure we arrange on loans above £1,000,000 comes from a lender that does not advertise it and takes the case on the strength of the discount evidence and the exit.

Beyond the published products, the mainstream specialist lenders on a standard bridge will lend at 70% to 75% of value rather than price where the discount is evidenced, which on a 20% discount still puts the loan at 88% to 94% of the price. The distinction between a "BMV product" and a lender that simply lends against value on a well-evidenced case is smaller than the marketing suggests. What changes between lenders is the value basis on commercial property, the minimum discount they will recognise, and how they treat connected-party sales. Those three questions decide the lender before rate does.

Private banks and the high street do not underwrite discounts at all. A high street lender lends on the lower of price and value, full stop, and a private bank will lend against value only where the borrower has a relationship and other assets with the bank. For a buyer without that relationship the specialist market is the route, and the bridge is refinanced onto a term product once the six-month ownership period has passed.

What does a below market value bridging loan cost?

Below market value bridging is priced above a standard bridge because the lender is carrying a higher percentage of the purchase price, with rates typically between 0.85% and 1.25% per month plus a 2% arrangement fee. A standard bridge at 65% of value on a clean residential asset prices from around 0.75% per month; add the discount structure and the higher percentage of price and the rate moves up a quarter to half a point. On loans above £1,000,000 the pricing is negotiated case by case and the discount evidence is the strongest lever you have.

Rates and lender criteria are subject to change. Figures correct at time of publication. Always speak to your broker for up-to-date rates and lending criteria on your specific case.

The bridging loan rates guide sets out the market bands by product and is reviewed monthly, and the bridging loan costs guide covers every fee line in detail. On a below market value case the one figure worth arguing over is the rate, because the fee is a percentage of a larger loan than a standard bridge would produce. A quarter of a point on £1,500,000 over twelve months is £45,000, which is more than the valuation and both sets of legals combined.

Does below market value bridging work on commercial property?

Yes, on the same purchase-price limits as residential property, with one difference that catches buyers out: the cap is often set against the 180-day value rather than the open market value. Warehouses, offices, retail units and mixed-use buildings bought at a genuine discount all qualify, arranged on an unregulated basis. The 180-day value is the valuer's estimate of what the building would fetch if it had to be sold within six months, and on commercial property it typically sits 10% to 15% below the open market figure.

That matters because a 20% discount to open market value can be only a 5% to 10% discount to the 180-day value, which pushes the case back towards a normal purchase in the lender's eyes. On the structure we arrange above £1,000,000 the cap is 75% of open market value on commercial as well as residential property, which is why the Bristol warehouse below completed at 90% of the price on the structure available at the time, and why the same building would reach 93.8% today. On a published commercial product at 60% of the 180-day value, the same building would have supported a materially smaller loan.

Commercial buyers should also expect the valuer to look at the tenancy. A discounted office with a tenant on a ten-year lease at market rent is a stronger case than a vacant one, because the lender's exit if it all goes wrong is a sale with income attached. Vacant commercial property bought below market value is financeable, but the discount needs to be wider and the exit needs to be a refinance or a sale that does not depend on finding a tenant first. Our commercial bridging loans page covers the wider commercial bridging market.

Is a below market value bridge regulated or unregulated?

The discount does not decide it; the property does. A below market value bridge secured against a property you or a close family member will live in is a regulated mortgage contract and follows the rules and lender pool set out in our guide to regulated versus unregulated bridging. A bridge secured against an investment, buy to let or commercial property is unregulated. The 95% and 75% mechanics are the same on both, but the regulated pool is smaller, the affordability checks are heavier, and the term is usually capped at twelve months unless the borrower meets the FCA high net worth definition.

In practice, most below market value bridging is unregulated because most genuine discounts are on investment stock. Probate houses, repossessions and portfolio lots are bought by investors, not owner-occupiers. Where an owner-occupier does buy below market value, usually a probate property they intend to live in, the case is placed with a regulated lender that will lend against value, and the deposit saving is the same.

How does the valuation work on a below market value purchase?

The lender instructs an independent RICS valuer to report the open market value in the property's current condition, and on commercial or specialist assets the 90-day and 180-day values as well. The valuer is told the purchase price and will comment on the gap. A valuer who cannot see a reason for the discount will often report a value close to the price, which collapses the structure, so the reason for the discount goes to the valuer through the lender before the inspection.

Open market value is not gross development value. A tired house bought at 25% under value because it needs a new roof and a kitchen is valued as it stands, roof and all. What it will be worth after the works is irrelevant to a below market value bridge; that is a refurbishment finance question, and the two products are combined where the plan is to buy cheap and refurbish. Our refurbishment bridging page explains how the works element is funded.

Automated and desktop valuations, which some lenders accept on standard residential bridges, are rarely enough on a below market value case. The whole structure rests on the difference between two numbers, and a lender will not let one of them be produced by a model. Budget for a physical inspection and for the valuer to want access within days of instruction, because the valuation is normally the critical path to completion.

What are the exit routes from a below market value bridging loan?

Refinance onto a term mortgage at the full valuation once you have owned the property for six months, or sell. The refinance is where the below market value structure pays off a second time: a term lender valuing the warehouse at £2,000,000 will lend £1,500,000 at 75% loan to value, which repays the £1,500,000 bridge in full and leaves you owning a £2,000,000 building for the deposit you put in plus the bridging costs.

The six-month rule is the constraint. Most term lenders will not lend against a valuation higher than the price paid until the property has been owned for six months, and some apply the rule for twelve. A handful will lend inside six months but only at the purchase price, which defeats the object. This is why the exit lender is chosen before the bridge is taken, not after. The remortgage application goes in around month four so that the offer lands as the six-month date passes, and a twelve-month bridging term gives room for a valuation to be disputed or a lender to be swapped without the bridge expiring. Our guide to bridging loan exit strategies covers the evidence lenders want on the exit at application.

Where the exit is a sale, the discount is the profit. A property bought at £1,600,000 and sold at £2,000,000 twelve months later has cleared the bridge, the interest and the costs and returned a margin, without any works. That is the trade the below market value product exists to fund, and it is why lenders take it seriously.

What can go wrong on a below market value bridging loan?

The structure fails in one of three places: the valuation comes in at the price, the discount turns out not to be arm's length, or the exit lender will not value at the full figure when the time comes. Each is avoidable and each is a matter of doing the work before exchange rather than after.

A valuation at the price is the most common. The buyer believes the property is worth £2,000,000, the valuer reports £1,750,000, and a 20% discount becomes a 9% one. The 75% cap on £1,750,000 is £1,312,500, which is 82% of the price, and the buyer's deposit has gone up by £127,500 overnight. Comparable evidence supplied through the lender before inspection is the defence, and where the comparables are thin, a second valuation from a different firm is sometimes worth the fee.

A discount that is not arm's length is the one lenders fear most, because it is the one that turns out to be fraud in the cases that make the trade press. Sub-sales and connected-party deals get the hardest look. The buyer has to show the chain of title, the original contract, and that nobody in the chain is related to anyone else. If that cannot be shown, the case is either declined or sized on the contracted price.

The exit that fails is the quietest. The bridge completes, the buyer waits six months, and the term lender's valuer reports a figure nearer the price than the bridging valuer did. The bridge is then refinanced at a lower loan than expected and the deposit the buyer expected to recover stays in the building. We arrange the exit lender's valuation to be instructed on the same basis as the bridging one where we can, and we do not take a bridge on a below market value purchase where the buyer's plan requires every pound of the discount to come back out at refinance.

Worked example: a £1.6 million warehouse valued at £2 million

That is the shape of the £1.6m Bristol warehouse we completed, on the 90% structure that was available then. The same structure ran on a £2.3m 14-unit block in London, where a landlord completed with a 10% deposit on a block the vendor priced for speed, and at a different scale on a £12.2m Midlands residential portfolio, where a landlord bought another landlord's entire stock in one lot at a price 25% below the sum of the individual valuations. The portfolio case is the one to read if you are buying in bulk, because it shows why the lender wanted a valuation on every unit rather than one figure for the lot.

How do you apply for a below market value bridging loan?

Six steps, and the first three happen before you exchange.

The full documents list for any bridging case is in our bridging loan criteria guide. On a below market value case add the seller-side letter explaining the discount, the marketing history if the property was listed, and on a portfolio purchase the schedule of units with a valuation instruction for each one.

Frequently asked questions