Commonly Used Bridging Finance Acronyms Explained

For brokers working in bridging finance, acronyms are part of daily conversations. Used to simplify complex terms or save time in communication, they can become second nature. However, for newer entrants or even seasoned professionals working across multiple lending types, keeping track of what each abbreviation means and how it applies to bridging finance is essential.

This article provides a clear explanation of some of the most commonly used bridging finance acronyms in the bridging sector. From key loan types to borrower profiles and underwriting metrics, we cover terms that frequently appear.

LTV – Loan to Value

Loan-to-Value is the ratio of the loan amount compared to the current market value of the property used as security. For example, if a borrower seeks a £500,000 loan against a property valued at £1M, the LTV would be 50 percent.

Principle lenders like Alternative Bridging use this measure to assess the level of risk. The final LTV offered will depend on the type of property, exit strategy, and credit strength of the borrower.

LTGDV – Loan to Gross Development Value

LTGDV is used for refurbishment or development works. It determines the loan amount as a percentage of the future value of the property upon completion of works. A typical use case would involve a borrower planning to sell or refinance based on the future increase in value.

If the borrower is undertaking a significant renovation or extension, the loan may be released in stages. LTGDV helps assess whether the exit plan is achievable based on anticipated property values.

LTC – Loan to Cost

This figure represents the loan amount as a percentage of the total cost of a development or refurbishment project. Total costs may include the purchase price, construction costs, professional fees, and contingency.

LTC is important when considering whether a borrower is contributing sufficient equity. A lower LTC suggests a stronger position and may influence pricing or credit appetite.

DIP – Decision in Principle

A Decision in Principle provides an early indication from the principle lender that a deal is likely to be acceptable, subject to valuation, legal work, and full underwriting. It helps set expectations for all parties and allows the borrower to move forward with more confidence.

While a DIP is not a binding offer, it often outlines headline terms and conditions that can be used to progress the deal.

AVM – Automated Valuation Model

An AVM uses data analysis to provide an estimated value for a property without the need for a physical inspection. These are typically used for lower-risk cases or properties in areas with reliable comparable sales data. In some cases, AVMs can speed up the application process.

MRICS – Member of the Royal Institution of Chartered Surveyors

When a formal valuation is required, it often must be carried out by an MRICS surveyor. This membership ensures the surveyor meets professional standards and is qualified to assess the property accurately.

EPC – Energy Performance Certificate

This certificate rates the energy efficiency of a property on a scale from A to G. A rating of E or above is generally required for residential rental properties. Lower EPC ratings can affect refinancing or resale potential and may require the borrower to make improvements as part of their exit plan.

AST – Assured Shorthold Tenancy

An AST is the standard tenancy agreement used in the rental market for residential properties in England and Wales. Lenders may request sight of the AST when assessing income, particularly where the exit strategy is based on refinancing to a buy-to-let mortgage.

If the property is tenanted, rental income and terms of the AST may be factored into affordability or exit viability.

HMO – House in Multiple Occupation

An HMO is a rental property shared by three or more tenants who are not part of the same household. HMOs often require licensing and will likely be valued differently to standard single-unit properties.

AGA – Authorised Guarantee Agreement

An AGA may be requested in commercial bridging scenarios where a lease assignment is involved. It ensures that the outgoing tenant remains responsible if the incoming tenant defaults.  While not common in all bridging transactions, AGAs can arise in more complex commercial property situations and should be reviewed by legal professionals before commitment.

CGT – Capital Gains Tax

When a borrower sells a property and makes a profit, they may be liable for Capital Gains Tax. Brokers should be aware of this when discussing sale-based exits, particularly for limited companies or higher-rate taxpayers.

Tax advice should be sought independently, but understanding that CGT may reduce the net proceeds from a sale can help assess the realism of the exit plan.

SME – Small and Medium-Sized Enterprise

Many bridging loan applicants fall into the SME category. These businesses may be using bridging finance to acquire property, raise working capital, or fund

refurbishment works. Lending decisions will often include an assessment of business accounts, trading history, and future plans.

Our Bridging Loans can offer flexibility that SMEs might not receive from traditional banks, especially when speed is important.

ERC – Early Repayment Charge

Some bridging loans will have an early repayment charge if the borrower repays earlier than the minimum term agreed.

BDLA – Bridging and Development Lenders Association

The BDLA is a trade association for lenders, brokers, and service providers in the bridging and development industry. Membership is optional but demonstrates a commitment to professionalism and transparency.

POA – Price on Application

This is typically seen on properties where the vendor or agent prefers not to disclose the asking price publicly. This could be a high-value property or a private sale property. For bridging purposes, it is important to get the right valuation figures from the outset in order to avoid delays.

Where a property is POA, a valuation or letter of intent may be required to confirm the estimated value for underwriting.

FCA – Financial Conduct Authority

The FCA regulates financial services in the UK. Regulated bridging loans typically relate to residential properties occupied by the borrower or a family member.

Even where loans are unregulated, the FCA principles should be followed as a matter of good practice.

CCJ – County Court Judgment

A CCJ is a court ruling that a person or company owes money. If a borrower has a CCJ on their credit record, it may influence the lender’s willingness to lend to them. It can also affect the terms of any loan.

Conclusion

Bridging finance acronyms play a central role in bridging finance. For brokers, understanding them is essential to working effectively with both clients and lenders. They allow quicker communication and clearer documentation, especially when working under tight deadlines or on complex cases.

Being familiar with these bridging finance acronyms helps ensure smoother transactions, better structuring, and more informed decisions throughout the process.

If you have any questions about our range of bridging loans, don’t hesitate to call us on 0208 349 5190 or simply get in touch with our BDMs and they will get right back to you.