What Is a Bridging Loan?
What is a Bridging loan in simple terms?
A bridging loan is a short-term property loan designed to help you move quickly when a mortgage is too slow. It “bridges” the gap between a time-sensitive opportunity (or problem) and your longer-term finance or sale.
In the UK, bridging finance is commonly used for auction purchases, chain breaks, refurbishments, or when the property is unmortgageable right now.
How does a Bridging loan work?
Bridging loans are secured against property and typically run for 1–24 months. The process is usually:
- Decision in Principle: often same day
- Valuation & solicitors: arranged quickly
- Completion: commonly 3–10 working days (case dependent)
| BRIDGING LOANS | |
|---|---|
| Suitable for | Residential, commercial, auctions, chain breaks, refurbishments |
| Typical LTV | Up to 70–75% (higher possible with strong security) |
| Loan amounts | From £25,000 to multi-million |
| Term | 1–24 months (short-term) |
Bridging loan vs mortgage
If you’re comparing options, this is the simplest way to think about it: mortgages optimise for cost, bridging optimises for speed and flexibility.
| Factor | Bridging Loan | Mortgage |
|---|---|---|
| Speed | Fast (often days) | Slower (weeks+) |
| Best for | Auctions, chain breaks, refurb, unmortgageable properties | Long-term ownership |
| Criteria | More flexible, exit focused | Stricter affordability |
| Term | 1–24 months | Years |
Common bridging loan uses
Common UK bridging loan uses include:
- Buying property at auction
- Fixing a chain break
- Buying an unmortgageable property
- Funding refurbishments or light development
- Quick purchase before refinancing to BTL/mortgage
What does a bridging loan cost?
Costs usually include monthly interest, arrangement fees, valuation, and legal fees. Interest can be rolled up (paid at the end) or serviced (paid monthly), depending on cash flow.
Regulated vs unregulated bridging
If the property is (or will be) your primary residence, the loan may be regulated. If it’s for investment or commercial use, it’s typically unregulated.
When a bridging loan is NOT a good idea
Bridging can be the right tool — but not if the exit is weak. A bridging loan may not be suitable if:
- You don’t have a clear repayment route (sale/refinance)
- Your timeline is uncertain and could drift beyond the term
- The project budget is unrealistic (especially refurb costs)
Real-world bridging loan examples
Auction purchase (fast completion)
Scenario: Buyer needed funds to complete within auction timelines.
Solution: Short-term bridging to secure the property.
Exit: Refinance onto a mortgage/BTL after completion.
Chain break (avoiding a collapse)
Scenario: Purchase at risk due to delays in an onward sale.
Solution: Bridging to complete purchase on time.
Exit: Repay on sale completion.
Refurb to refinance
Scenario: Property unmortgageable until works completed.
Solution: Bridging for purchase + light refurbishment.
Exit: Refinance once the property becomes mortgageable.
Common bridging loan mistakes
- Choosing rate over reliability (then the deal doesn’t complete)
- Underestimating legal and valuation timelines
- Weak exit strategy or unrealistic refinance expectations
- Not disclosing adverse credit/complex ownership early
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Frequently Asked Questions
How quickly can a bridging loan complete?
Do I need a perfect credit score?
Can I use bridging finance for auctions?
Yes — it’s a common use because it’s designed to complete within tight timeframes.
What’s the difference between regulated and unregulated bridging?
Regulated usually applies when the loan is for a home you live in (or will live in). Investment/commercial lending is typically unregulated.