Bridging is the easiest product in the suite to write badly. The security is in front of the lender, the borrower is motivated, the file lands quickly, and the indicative numbers stack up against the asset on the contract. The temptation is to size the loan against the asset on the contract. We don't.
Every Archer bridging file is sized against the exit. If the exit is the sale of a secondary property already under contract, that contract's settlement figure is the value we underwrite to. If the exit is a refinance to a major bank, the bank's conservative serviceability calc — not ours — is the one we run the LVR against. If the exit is the completion of a construction loan, the QS-monitored end-value is the figure we back into.
Why this matters in practice
Most bridging losses we see in the Australian market are not bridging losses in the strict sense — they're exit losses that happen to crystallise during the bridge. The asset under contract for sale doesn't settle at the figure the contract implies, because conditions change between contract and settlement. The refinance doesn't land at the LVR the broker indicated, because the bank tightens between term sheet and formal. The construction completes late, and the bridge rolls past the maturity the file was structured to.
A bridge sized to the entry value will absorb that with a margin call or a discharge delay. A bridge sized to the exit value usually doesn't need to.
How we put it on the file
Two things change visibly when you underwrite this way. First, the LVR on the file at indicative is often lower than the LVR the borrower expected, because the exit value is lower than the entry value. Second, the conditions on the formal letter reference the exit — verification of the contract under settlement, evidence of the refinance progressing, a QS milestone that triggers maturity extension if the build runs long.
Brokers who run files through us regularly know this is how we operate, so they tend to bring us files where the exit is already in train. The selection effect is good for both sides.
The expensive exceptions
Two patterns we'll write outside the standard envelope. First, where the borrower carries personal capital or balance sheet that materially changes the exit risk — a sponsor with a track record and the means to inject equity if the timeline slips. Second, where the security itself is liquid enough that a forced sale at materially below market would still discharge the loan with margin.
Both go to the credit committee with the structuring written on the file. Neither is priced at standard rate-card.