Multiple gatekeepers control your path to financing below-market-value (BMV) deals. Lenders, valuers and brokers make decisions based on their risk appetites, not necessarily your investment goals. Crucial relationships between lenders and valuers determine whether your deal succeeds or fails. Each player protects themselves first. Lenders avoid risk by defaulting to purchase price lending. Valuers fear professional indemnity claims if they support high valuations. Brokers want fast completions, not complex cases that might fall through. You’re left navigating this minefield alone. The market is designed to force standardisation, not accommodate exceptions like BMV deals. This creates a fundamental disconnect: the entire premise of BMV investing relies on finding value others miss, but the financing market actively resists recognising this value. Without strategic intervention, the deal dies. Lenders use valuation as a shield against risk, not a tool to understand true market value. Mortgage underwriters face career risk for approving exceptions. Valuation firms fear liability exposure. Building societies prioritise member protection over investor opportunity. Every player’s incentives align against your BMV strategy. Here’s how to break through:
1. Understand Valuation Instructions
Work with advisers who understand how to position your application so the valuation instruction supports your case. For example, some specialist lenders can be requested to instruct valuers without disclosing the purchase price, allowing an unbiased assessment of market value. Other lenders can instruct valuations on an “investment basis” that considers rental yield and potential. If you don’t understand this, you’ve lost control before the process begins. The valuer receives instructions that immediately frame your BMV purchase as suspicious rather than opportunistic. They’re primed to find reasons why the value can’t exceed purchase price rather than assessing true market worth. This approach works particularly well for commercial property investments where “investment value” based on yield is a standard valuation method, making it easier to justify values above purchase price.
2. Bypass Standard Lending Criteria with Multi-Lender Relationships
Standard lending models fail BMV investors. You’re wasting time with lenders who’ll never approve your valuation-based request. Why? Institutional risk policies prevent frontline staff from making exceptions. The solution? Build relationships with multiple lenders with different risk appetites. Target specialist lenders specifically designed for property investors rather than mainstream banks. These specialists understand BMV strategies and have created underwriting models that accommodate them. Don’t just apply randomly. Research each lender’s appetite for BMV deals through broker networks. Some will consider the valuation if supporting evidence is strong, while others never deviate from purchase price. Create a matrix of lenders categorised by their BMV flexibility. This approach saves you weeks of rejected applications and thousands in abortive fees. If you don’t do this? You’ll face endless rejection from lenders who automatically flag BMV deals as fraud risks. Your deal stalls while carrying costs mount. Meanwhile, competing investors with established lending relationships swoop in and take your opportunities.
3. Use The Power of Bridging Finance
You’re fighting against rigid institutional timing. Mortgage decisions move at their pace, not yours. In 2024, an Arc & Co. real estate funding report noted an 8% increase in acquisitions, with bridging finance being the primary tool for investors and developers to act fast and capitalise on value-add opportunities before securing longer-term financing. This level of financial agility is crucial – BMV deals usually have compressed timeframes, which is often why they’re available below market value. But institutional mortgage processes can’t accelerate to match. Here’s how to break this timing mismatch: Arrange short-term bridging finance to secure the property quickly at the BMV price. This gives you breathing room to arrange longer-term finance based on the higher valuation without losing the deal. The bridging loan provides speed while the subsequent remortgage captures the equity. Think strategically about application timing. Most lenders have month-end and quarter-end targets. Applications submitted when teams are pushing to hit numbers often receive faster, more favourable consideration. Credit committees typically meet on specific days - time your application to catch the earliest possible review. Ignore this strategy and you’ll lose deals to faster buyers. BMV opportunities disappear in hours, not days. If you’re waiting for traditional mortgage approval, the seller moves on. Your competitor with bridging finance in place acts while you’re still gathering paperwork.
4. Understand and Explain Your Deal
Lenders often reject BMV applications because they lack convincing evidence. The solution? Create a comprehensive valuation evidence package that makes your case irrefutable. Don’t rely solely on the valuer’s report - they’re constrained by professional caution. Your package should include: Detailed comparable properties with adjustments showing why your property’s value exceeds the purchase price. Specific local market analysis demonstrating unusual conditions creating the BMV opportunity. Evidence of value-adding potential through permitted development rights, rental demand analysis, or planning opportunities. Documentation explaining the seller’s motivation for accepting below market price - this addresses the fraud concern directly. This package must be prepared before application, not as an afterthought when challenged. It should anticipate and address every possible objection. The goal is to shift from "why is this so cheap?" to "now I understand the opportunity." Without this preparation, lenders default to caution and decline. Their risk models flag BMV deals as potentially fraudulent, and without compelling evidence to the contrary, rejection is the path of least resistance. You’ll waste months in cycles of application, rejection, and appeal when you could be closing deals. This approach particularly benefits newer investors who lack the track record to justify exceptions on reputation alone, allowing them to compensate with superior preparation and evidence.
5. Control the Lending Process Timeline
You’re losing deals because you don’t understand the complex sequence of steps in securing BMV financing. The solution? Create a detailed process map of the entire lending journey from application to completion, identifying every potential bottleneck. Standard mortgage processes involve at least 15 - 20 separate steps across multiple departments: initial application, case assignment, underwriting review, valuation instruction, valuation review, credit approval, legal instruction, legal review, and completion. Each step has its own timeframe and potential delays. For BMV deals, you need to identify where the “exception” decisions happen. These are critical points where your application diverts from standard processing to specialist review. You need to know exactly when to follow up and with whom. You can prepare additional information before it’s requested and address potential objections proactively. Most importantly, you set realistic timeframes for sellers so they don’t get nervous and accept competing offers.
6. Create a Fallback Financing Strategy
Relying solely on valuation-based lending leaves you vulnerable when lenders decline. The solution? Develop a multi-layered financing strategy with pre-arranged fallback options. Smart BMV investors never rely on just one financing approach. They create contingency plans before making offers. Your primary strategy remains securing lending on valuation. But simultaneously arrange:
Bridging finance secured against your existing portfolio rather than just the target property
Private lender relationships who understand BMV strategies and make decisions based on the deal, not rigid criteria
Joint venture partners who can provide cash for part of the deal in exchange for equity
Cross-collateralisation options using equity in your existing properties to secure the new purchase
This layered approach means rejection from one source doesn’t kill your deal. When mainstream lenders decline valuation-based lending, you immediately activate your alternatives without losing momentum. Without these fallbacks, a single lending rejection can terminate your deal and damage your reputation with sellers. You become known as someone who can’t complete, limiting future BMV opportunities. Meanwhile, investors with flexible financing solutions consistently secure the best deals. This approach is particularly valuable for investors with existing portfolios who can leverage their equity and relationships, creating a significant competitive advantage over newer investors with fewer options.
Take Control of Your BMV Financing Journey – Secure Deals When Others Fail
Integrating the strategies above into your investment process turns any knowledge gap into your edge: you move from confused applicant to informed dealmaker, closing transactions that others lose. Every setback becomes a lesson, letting you refine your approach and build a specialist skill set that delivers consistent BMV funding results while others struggle. Still, the complexity reflects the stakes, and professional guidance can make all the difference in breakthrough and outcome.
Property investment is hard enough. LoanLabs optimises your funding so you can focus on your business. We would be delighted to fund your project too - contact us in confidence at www.loanlabs.com.
