Capital raising bridging loan
A capital-raising bridging loan releases equity from property you own for a defined short-term need — business cash flow, a tax bill, a deposit on another purchase or an opportunity with a deadline. It is secured, it is priced as short-term finance, and lenders need a timed, evidenced way to repay it, not a hope that one will appear. If the property is your home, it is likely to be regulated.
Last reviewed: 20 October 2026 · By Pasecom Group Ltd editorial team
BridgingLoans.online is an independent UK introducer operated by PASECOM GROUP LTD (company 17139327, ICO ZC117546). We do not lend and we do not advise. Nothing on this page is a quote, an MCOB illustration or an offer of credit.
How does capital raising with a bridge work?
The lender advances money against the surplus equity in a property after existing charges, the fee and the interest. Equity is not the same as borrowing capacity: the loan is capped at a percentage of value, usually measured on the gross loan, and any existing mortgage counts against that cap.
There are two common structures. A first-charge bridge repays any existing mortgage and releases extra cash on top. A second-charge bridge leaves the existing mortgage in place and sits behind it — possible only if the first lender’s position is respected and the combined borrowing fits the value. If you have a cheap first mortgage you do not want to lose, a second charge is often the conversation; if the existing loan is expensive or ending, a first charge may be.
What is it typically used for?
| Use | Why bridging | Typical exit |
|---|---|---|
| Business cash flow | Money needed before a contract payment or sale arrives | The contracted receipt, or sale of an asset |
| Tax bill | The deadline does not move; other funds are not yet available | Sale, refinance or a documented receipt |
| Deposit or purchase elsewhere | Speed, or an asset that is not yet mortgageable | Refinance of either property, or a sale |
| Opportunity purchase | A deadline such as an auction | Refinance or sale of the new asset |
| Releasing equity from a portfolio | Speed or unusual properties | Portfolio refinance or sales |
Tax bills deserve a specific note: the interest on the bridge adds to what you ultimately pay, and the tax liability itself should be discussed with a tax adviser. Bridging can buy time; it does not reduce the bill.
How do I document the exit?
Lenders want to see where the money to repay will come from and when. A sale with a realistic price, a refinance that fits a future lender’s criteria, a contracted business receipt or the sale of another asset can all work if evidenced. A contract is not cleared funds: lenders consider the counterparty and the timing. Expected growth in value is a weak plan. See exit strategies for bridging finance.
Worked example: raising £200,000 for six months
Suppose a business owner owns an investment property worth £800,000 outright and needs £200,000 for six months until a contracted payment arrives. Using this site’s teaching defaults:
| Line | Amount |
|---|---|
| Property value (owned outright) | £800,000 |
| Net funds needed | £200,000 |
| Arrangement fee (2% of net, added to the loan) | £4,000 |
| Interest base (net + fee) | £204,000 |
| Monthly interest at 0.85% | £1,734 |
| Total interest (6 months, simple retained) | £10,404 |
| Gross facility | £214,404 |
| Net LTV | 25.0% |
| Gross LTV | 26.8% |
| Total cost of credit (fee + interest) | £14,404 |
Indicative educational example using this site’s calculator method: fee = net × 2%; interest = (net + fee) × 0.85% × months; gross = net + fee + interest. The 0.85% a month and 2% fee are teaching defaults, not our rates and not a quote. Valuation, legal and broker costs are not included.
The gross LTV is low, so the security is comfortable; the question is the exit. The contracted payment needs to arrive in time to repay £214,404, plus any exit fee. If it might be two months late, a longer term adds £3,468 of retained interest — usually cheaper than an extension negotiated at the last minute. Model it in the calculator.
Which mistakes are common?
- Raising more than the need “while you are at it”: every extra pound carries the fee and monthly interest.
- Choosing a term that only works if the receipt arrives on the first possible day.
- Assuming a second charge is quick when the first lender’s consent has not been asked for.
- Using a home as security for a business need without realising the loan may be regulated, with a different process and timescale.
- What is the gross advance, what is deducted, and what net cash will I actually receive?
- Is interest retained, serviced or rolled up, and is unused interest rebated if I repay early?
- What are all the fees, including any exit fee and the cost of an extension?
- What is the total repayable on the redemption date?
- If it is a second charge, does my first lender need to consent, and is there a cost?
Company borrowers should also read limited company bridging loans; commercial property owners, commercial bridging. If speed is not the issue, look at alternatives to bridging finance first — a remortgage or second-charge mortgage may cost less over a longer period.
Is this regulated or unregulated bridging?
Occupancy is the legal dividing line. If you or a close family member live in, or will live in, the property as a home (the usual test is at least 40% of it), the loan is likely to be a regulated mortgage contract, with affordability checks, consumer protections and usually a maximum 12-month term. BridgingLoans.online is an introducer, not an FCA-authorised broker and not a lender: where occupancy is yes, we pass a complete pack to an FCA-regulated broker, who explains the protections that apply. Investment, commercial, vacant buy-to-let, land and many company or SPV files are often unregulated. Either way the figures here are indicative only and this is not advice or a product recommendation. See regulated bridging and unregulated bridging.
Your home or property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.
Indicative estimate only. Not a quote, illustration under MCOB, or offer of credit. BridgingLoans.online is a trading name of PASECOM GROUP LTD (company 17139327, ICO ZC117546), an introducer, not a lender. Email hello@bridgingloans.online.
Last reviewed: 20 October 2026.
FAQs
Can I raise capital without repaying my mortgage?
Sometimes, through a second-charge bridge, if the first lender’s position is respected and the combined borrowing fits the property value.
Can I use a bridging loan to pay a tax bill?
Some lenders will consider it if there is a clear exit. The interest adds to the cost, and the tax liability itself should be discussed with a tax adviser.
Is business cash flow enough of an exit?
It can support the case, but lenders want evidence of where the repayment will come from and when — such as a contract, a sale or a refinance.
How much equity can I release?
Lenders cap the loan at a percentage of value, usually on the gross loan including fees and retained interest, with any existing mortgage counted against the cap.
What if the exit is late?
Interest continues and an extension is at the lender’s discretion, usually at extra cost. Allow a realistic buffer when you choose the term.
Can I raise capital on a property I live in?
Possibly, but if you or a close family member live in the property the loan is likely to be regulated, with affordability checks and a 12-month cap on the term in most cases. Expect a closer look at why you need the money and how it will be repaid.
Next step
Use the calculator for an indicative starting point, then enquire if you want an introduction.