Bridging Loans UK: The Complete Guide to Short-Term Property Finance
What is a bridging loan?
Bridging loans are a popular short-term financing option in the UK, providing quick access to funds secured against property. They are commonly used to “bridge the gap” in property transactions, offering flexibility when timing is critical. This impartial guide explains everything you need to know about bridging loans in the UK, including how they work, costs, types, risks, and alternatives.
Why is a Bridging Loan?
A bridging loan is a short-term secured loan, typically lasting from a few weeks to 12 months (sometimes up to 24 months). It allows borrowers to access large sums quickly while waiting for other funds, such as from a property sale or long-term mortgage.
These loans are secured against property (residential, buy-to-let, commercial, or land), meaning the lender can repossess the asset if repayments are not met. Bridging loans are higher-risk for borrowers due to their cost and speed, but they provide certainty in fast-moving property markets.
Common uses include:
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Buying a new home before selling your current one
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Purchasing property at auction (where completion is required quickly)
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Fixing broken property chains
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Funding renovations or refurbishments before refinancing
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Investment purchases or development projects
How Do Bridging Loans Work?
Bridging loans provide rapid funding, often within days or weeks. Here’s a typical process:
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1. Application
Provide details of the property (or any other) security and your exit strategy (how you’ll repay after the 6-24 months).
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2. Valuation
The lender values the security property (sometimes online or automated to speed things up).
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3. Approval and Offer
Quick decision, often within hours or days.
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4. Completion (Drawdown)
Funds released, usually directly to solicitors.
Important to note: Some lenders may charge a refundable fee at point 3.
Repayment is typically a lump sum at the end (from property sale or refinance). Interest can be:
- Paid monthly
- Rolled up (added to the loan and paid at the end)
- Retained (deducted from the initial advance)
Lenders require a clear exit strategy – the most common are property sale or remortgage.
Example Scenario
You need £100,000 deposit for a £400,000 new home but haven’t sold your current property yet. A bridging loan covers the shortfall, secured against your existing home. Once sold, you repay the bridge from the proceeds.
Use our bridging loan calculator to estimate costs for your scenario
Who else could use Bridging Finance?
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Age
Applicants considered too old to obtain a standard high-street mortgage, as most mortgage lenders now prevent borrowing beyond what is deemed “normal retirement age”.
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Property conditions
The property may be in a condition where it is not suitable for mortgage financing, and as such, a bridging loan could be used to complete the purchase and any required work prior to refinancing.
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Credit
The applicant may have had some adverse credit, however minor, which was previously acceptable to lenders but now no longer fits the high street lending criteria.
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Income
The applicant may have difficulty proving the income requirements needed for more regular financing. This may be due to poor self-employment records, a break from work, a reduction in self-employed workloads, or overtime.
Types of Bridging Loan
Bridging loans fall into several categories:
Open vs Closed:
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- Closed: Fixed repayment date (e.g., confirmed property sale). Usually cheaper.
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Regulated vs Unregulated:
- Regulated: For owner-occupied homes (FCA-protected, more safeguards).
Unregulated: For investment, buy-to-let, or commercial properties (fewer protections).
First Charge vs Second Charge:
- First Charge: On mortgage-free property (lender has priority).
Second Charge: Behind an existing mortgage (higher rates due to risk)
Our Incredible Team
Good Reviews by Customers
“I needed quick funds to secure a property auction win, and Kelly at UKBL was my savior. Their application was straightforward, and the funds were in my account within days. The interest rates are a bit higher, but for the speed and efficiency, it was worth every penny. Highly recommended for anyone in a tight spot!
I was skeptical about bridging loans at first, but Jess changed my mind. They explained everything in detail without any of the usual finance jargon. The approval process was surprisingly stress-free, and their customer service was top-notch. If you’re looking for a bridge loan, these guys are the real deal.
UK Bridging Loans provided a bridge loan when my bank turned me down. The flexibility they offered was exactly what I needed to renovate my fixer-upper before selling. Their team was very responsive, and they made what could have been a stressful situation quite manageable. A lifesaver!
I’ve used UK Bridging Loans twice now for property development projects. Their rates are competitive, and they really know their stuff when it comes to property investment.
Ready to Begin
During a phone call or one of our online appointments, we’ll help you decide if a bridge loan is right for you
We’ll guide you through the process, explain fees, and compare rates for all bridging loans available to you.
We’ll handle everything from paperwork to getting the money into your account.
We are open 7 days a week!
Request a Free Consultation
Frequently asked questions
Can’t find an answer? Call us at 0116 366 6338 or email us contact@ukbridgingloans.co.uk
How much does a bridging loan cost?
Bridging loans can seem expensive because of high APRs. They are designed to be short-term, which is cost-effective if repaid quickly. Monthly interest can be as low as 0.5% and is added to the final payment, so no monthly payments throughout the loan period.
Interest rates can vary between lenders, depending on policies, your creditworthiness, and when you plan to repay the loan.
Bridging loans may come with additional fees:
- Arrangement fee (1-2%): For setting up the loan.
- Exit fee (~1%): Charged when you repay.
- Administration and repayment fees: Vary by lender.
- Legal fees: For legal services.
- Valuation fees: To assess property value.
Using a broker can help reduce these fees as they can find lenders with better terms, potentially saving money.
What property can be used as collateral for a bridging loan?
Bridging loans allow you to use various types of property as security. Other than your primary residence, you can also use undeveloped land or commercial properties. The property doesn’t need to be finished.
You can use the following property types for a bridging loan:
- Residential developments
- Residential property
- Commercial developments
- Commercial property
- Commercial investment property
- Residential investment property
- Land
- Offices
- Farms
- Agricultural land
- Retail units
- Auction properties (regardless of condition)
When is a bridging loan needed?
Normally, for urgent needs like buying property or making business investments while awaiting long-term financing or asset sales.
Is a bridging loan a good idea?
Whether a bridging loan is a good choice depends on your needs, financial situation, and the loan’s purpose
What are first and "second charge" bridging loans?
Bridging loans fall into two categories: ‘first charge’ and ‘second charge’.
- First-charge loans have priority over any existing mortgages or loans on the property. They’re commonly used for property purchases.
- Second-charge bridging loans come after your existing mortgage. They’re often used when your first mortgage has a lower interest rate and you need extra funds.
The main difference is in repayment priority if there’s a default. First-charge loans are repaid before second-charge loans.
How much can I borrow with a bridging loan?
The amount you’re eligible for depends on several factors, including the value of the security assets, lender’s maximum loan-to-value (LTV; usually 75%), and your repayment exit plan. Typically, loans range from a minimum of £20,000 to a maximum of around £25 million or more.
Is a bridging loan cheaper than a mortgage?
No, a bridging loan is usually more expensive than a mortgage.
How much do you need to put down for a bridging loan?
Typically a 20–40% deposit is sufficient. A 100% loan might be possible but could require extra collateral and come with higher costs.
Can I get a bridging loan with bad credit?
Yes, you can get a bridge loan with bad credit, though not with all lenders. You might face higher costs. Brokers can help you find suitable lenders. Applying doesn’t affect your credit score.
What are the alternatives to a bridging loan?
If bridging loans aren’t right for you, consider these options:
- Remortgaging: Replace your current mortgage with a new one.
- Let-to-Buy Mortgages: Rent out your current home while buying a new one.
- Secured business loans: Finance your business with assets as collateral.
- Personal loans: Unsecured loans for personal needs.
- Development finance: Funding for property development projects.
How do I find the right bridging loan for me?
To find the best bridging loan:
- 1. Determine your need: Know the exact amount and repayment timeline.
- 2. Assess suitability: Check your budget, available security, exit strategy, and existing debts.
- 3. Compare the market: Use a broker to find the best terms and lenders.
- 4. Check the fine print: Review the agreement for interest rates, fees, and repayment details.
Do bridging loans do credit checks?
Yes, most lenders perform credit checks as part of the application process, though the property is the main focus.
How to accelerate your bridging loan application process?
Communicate clearly with your lender or broker. Ask key questions early on, find out what documents are required, and when to expect underwriting details. This helps speed up the process.