Bridging basics

What is a bridging loan, and when does it make sense

A bridging loan is short term borrowing secured on property, taken out to cover a gap in funding until a defined event repays it. It is a timing tool, not a long term mortgage, and it only makes sense when the exit is credible.

Category: How it works

Product: Bridging Finance

Purpose: Short term funding gap
Security: First or second charge on property
Term: Usually months rather than years
Repaid by: Sale or refinance, agreed up front

How bridging differs from a mortgage

A mortgage is priced for the long haul and underwritten mainly on income. Bridging is priced for speed and underwritten mainly on the asset and the exit. Interest is often rolled up or retained rather than paid monthly, so the borrower is not servicing a payment while the project runs. The trade off is cost: short term money carries higher pricing than term debt, which varies by lender, security and risk.

Assessed on asset quality and exit, not just income
Interest can be serviced, rolled up or retained depending on the lender
Set up in weeks rather than months, subject to valuation and legals
Designed to be replaced, not lived with

When bridging genuinely fits

The common cases are an auction purchase with a fixed completion date, a chain break where a sale has not yet completed, a property that is unmortgageable until works are done, a lease extension or title issue that blocks term lending, and a business needing to move on an opportunity before term finance can be arranged. In each case there is a specific event that ends the loan.

When it does not fit

If the exit is vague, bridging is the wrong product. Hoping a property will sell without evidence of value, or assuming a refinance will be available without checking the criteria, is how borrowers get stuck paying short term rates for longer than planned. We would rather tell you a case does not work than place it badly.

What a broker adds

Bridging is a specialist market with a wide range of lenders, from institutional funders through to private capital, and pricing and appetite differ enormously by property type and borrower profile. We have whole of market access and place the case with lenders who actually want it, rather than sending it to whoever is nearest.

Frequently asked

How long does a bridging loan run for?

Terms are typically set in months rather than years, with the length matched to the exit event. The exact term available depends on the lender and the case.

Do I have to make monthly payments?

Not always. Many lenders allow interest to be rolled up or retained from the advance so nothing is paid monthly, though this reduces the net funds released.

Is a bridging loan secured on my property?

Yes. Bridging is secured against property, by first charge or in some cases second charge. Your property may be at risk if you do not repay as agreed.

What happens if my exit is delayed?

Speak to the broker early. Some lenders will consider an extension or a refinance onto term debt, but this is a lender decision and not something anyone can promise in advance.

Can I get bridging on a property that needs work?

Often yes. Properties that are not currently mortgageable are one of the main reasons borrowers use bridging, subject to valuation and the lender's view of the works.

Not sure bridging is right for you

Call 0345 2690628 and describe the deal. If a different product fits better, we will say so.

Call 0345 2690628 Send your deal details