BMV Funding Myths – What Investors Often Get Wrong

Below market value (BMV) funding attracts strong interest from investors who want to stretch leverage, reduce cash input, or recycle capital quickly. But because of the way discounts, valuations, and lender policies interact, the product is surrounded by BMV funding myths that regularly mislead buyers.

Some misconceptions arise from social media oversimplification; others come from misunderstanding how lenders underwrite discounted acquisitions. This article breaks down the most persistent BMV funding myths — helping investors approach lenders with clarity, realism, and stronger applications.

If you’re exploring how discounted acquisitions are funded in practice, our main guide to Below Market Value Bridging Finance explains rates, criteria, day-one leverage, and lender policy in more detail.

Myth #1 — “A Big discount means the Lender will always fund 100%.”

This is the most widespread misunderstanding in the BMV space.

A discount — even a deep one — does not guarantee 100% funding. In reality, lenders work to three essential criteria:

1. The discount must be independently proven.

Lenders rely on a full RICS valuation. A discount is only meaningful if the surveyor confirms the true open-market value (OMV). Agent estimates or vendor claims play no role in underwriting.

2. The exit must be watertight.

Aggressive leverage is only offered when the exit is low-risk, evidenced, and achievable. Strong exits include:

• Post-refurb refinance with comparable sales

• A resale backed by genuine demand

• A refinance where seasoning and lender appetite already align

Weak, speculative, or uplift-dependent exits reduce day-one leverage immediately.

3. The lender must allow OMV-based underwriting on day one.

This is where most investors get caught out.
Some lenders do not lend against OMV at completion — even when the discount is large. They may:

• Cap loan-to-cost

• Blend PP and valuation

• Apply reduced leverage for discounted deals

Reality:

100% funding is possible — but only when policy, valuation, and exit strength align.
It is never automatic and never driven by the discount alone.

In practice, these outcomes are determined less by the headline discount and more by how lenders assess risk at application stage. Valuation evidence, borrower profile, and exit planning all feed into the underwriting decision, which explains why similar BMV deals can receive very different leverage outcomes. Our guide to BMV lender underwriting explains how lenders assess discounted transactions in detail.

Myth #2 — “Most lenders support BMV funding.”

BMV funding is one of the most varied appetite areas within the bridging market.

Many lenders actively avoid it.

Common reasons include:

• Concerns over artificial discounts

• Fear of connected-party transactions

• Past issues with inflated valuations

• Compliance sensitivity around distressed sales

These lenders prefer standard acquisitions with predictable cost structures.

Some lenders support BMV — but only under strict conditions.

They typically require:

• A validated, defensible discount

• Strong borrower capability

• Clear liquidity for works and contingency

• A reliable exit, pre-assessed by the underwriter

A smaller group actively embraces genuine BMV deals.

These lenders specialise in:

• Below-value off-market purchases

• Motivated vendor disposals

• Condition-led discounts where refurbishment is planned

Reality:

BMV funding appetite varies greatly. Success depends on matching the deal to the correct lender, not assuming universal support.

Myth #3 — “BMV funding is just for flips.”

Flipping is only one of several strategies where BMV funding creates value.

Landlords use BMV structures effectively.

A discounted acquisition followed by a refurbishment and refinance can:

• Release capital early

• Reduce initial cash exposure

• Increase long-term rental yield

• Accelerate portfolio growth

For many landlords, BMV funding is a way of compounding equity rather than exiting quickly.

Small developers also use BMV funding.

Discounts often reflect:

• A motivated vendor

• Planning potential

• Condition-led uplift opportunity

If managed properly, the borrower can turn a discounted purchase into a quality asset with refinance or sale options.

Long-term investors benefit too.

Some investors want to hold assets indefinitely. BMV funding simply allows them to do so with:

• Higher equity positions from day one

• More efficient capital use

• Lower entry costs

Reality:

BMV funding is versatile and used throughout the investment spectrum — not just by flippers.

For a real-world example of how discounted acquisitions perform in practice, see our detailed case study: How OMV Discount Shaped a BMV Funding Structure.

Myth #4 — “If the vendor agrees a discount, the valuer will support it.”

Investors often assume that a low purchase price automatically translates into a high valuation. This is rarely the case.

RICS valuers assess OMV — not the story behind the discount.

They evaluate what the property would realistically sell for on the open market.
If comparables do not support the assumed value, the valuation may come in far lower.

Discounts can disappear under scrutiny.

A purchase at £150,000 could still value at:

• £165,000 due to buyer competition

• £160,000 due to condition

• £155,000 due to local comparables

• £150,000 if the surveyor believes the agreed price is the true market value

Underwritten value can be even lower.

Some lenders haircut valuations where:

• Works are significant

• Market liquidity is thin

• Exit timelines are tight

Reality:

A discount is an opportunity — but valuation determines leverage.
The two are not the same.

Myth #5 — “Experience doesn’t matter — the discount does the heavy lifting.”

Many first-time investors believe the size of the discount compensates for lack of track record. In practice, lenders assess experience as a key risk factor, especially in discounted acquisitions.

Less experience = higher perceived risk.

Lenders want evidence that the borrower can:

• Manage refurb works

• Deliver the exit within predicted timescales

• Handle contractor risk

• Navigate valuation challenges

Discounts do not override weak borrower profiles.

Even strong equity positions are not enough if the borrower cannot demonstrate capability.

Experienced investors unlock better terms.

Track record often results in:

• Higher day-one leverage

• Faster completions

• More flexible exit modelling

• Confidence in projected uplift

Reality:

Experience does not need to be extensive — but it must be relevant to the asset and the strategy.

Final Thought for Investors

BMV funding can be a powerful tool for scaling, recycling capital, and accelerating portfolio growth. But it only performs as intended when investors understand the gap between myth and lender reality.

• Discounts alone do not guarantee leverage.

• Valuations can reframe a deal entirely.

• Experience, liquidity, and exit strength remain central to underwriting.

With specialist guidance, investors can avoid the common misconceptions and secure funding structures that genuinely support their strategy.

Speak to our BMV Finance Expert