Landlords shifting from bridging to buy-to-let could be left short

Landlords who have taken out short-term bridging loans to fund purchases that they plan to repay with a buy-to-let mortgage could be in for a shock amid rising rates.

Many landlords may have turned to bridging loans in the past six to 18 months to fund purchases or get work done with the intention of remortgaging into a buy-to-let deal.

But mortgage brokers are warning that buy-to-let mortgage rates are on the rise, mirroring their owner-occupier equivalents, while stress tests have become tougher.

If your bridge matures this year, start the buy-to-let conversation now.”

Data from Moneyfacts shows the average two-year buy-to-let residential mortgage rate is currently 5.36%, rising to 5.73% for a five-year deal.

By contrast, the average two-year fixed buy-to-let mortgage rate in September 2025 was 4.88% and the average five-year fixed buy-to-let rate was 5.21%.

Craig Fish, director of London-based broker Lodestone, says: “A bridging loan is a promise you’ll be somewhere else in 12 months, and right now a lot of investors are finding that door has shut on them.

“Rates are climbing on inflation fears, lenders are trimming what they’ll offer, and the buy-to-let exit people banked on simply isn’t there anymore.

“The investors getting hurt are the ones who treated refinancing as a box to tick rather than a moving target. An extension might buy you time, but it rarely comes cheap.

“If your bridge matures this year, start the buy-to-let conversation now, because a bridging loan extension will see any expected profits evaporate.”

Shortfall warnings

An illustrative example provided to Bridging Loan Directory by Nouran Moustafa, practice principal and independent financial adviser at Roxton Wealth, highlighted the real financial impact of rising mortgage rates for property investors.

Moustafa says that, on a property generating £24,000 a year in rent, a stress rate increasing from 5.5% to 6% as lenders hedge their positions could reduce the loan supported by that income from approximately £349,000 to £320,000 – a shortfall of around £29,000.

Duncan Kreeger, founder of commercial mortgage lender and bridging specialist TAB, said refinance exits are likely to receive closer scrutiny in the current climate.

Kreeger says higher ‘term’ rates on a buy-to-let mortgage do not automatically prevent an exit, but affordability, rental cover, property value and any contribution from the borrower all need to remain credible.

TAB says it has restructured cases where a refinance no longer supported the original exit assumption.