Bridging Loans: The Complete UK Guide

A bridging loan is a short-term loan secured on property. It fills a gap when you need money now and will be able to repay it soon, from a sale or a longer-term mortgage. Lenders can complete in days or weeks and will lend on property that ordinary mortgage lenders will not touch.

The trade-off is cost. Bridging is priced per month, carries several fees and is built to be repaid quickly. Used for the right job with a solid exit, it is one of the most useful tools in property. Used without one, it gets expensive fast.

This guide covers when to use bridging, how much you can borrow, costs, how interest works, regulation and the exit. For specific uses, see our guides to auction finance, refurbishment finance and development finance.

What is a bridging loan and how does it work?

A bridging loan is borrowing secured on property, usually for 1 to 24 months. You borrow up to around 70% to 75% of the value, interest is charged monthly and is usually added to the loan or held back at the start, and you repay everything in one go at the end. That repayment comes from a sale, a refinance or other funds, which is why lenders focus so hard on your exit.

When do people use bridging?

Situation	How bridging helps	Guide
Buying at auction	Completes within the 28-day deadline	Auction finance
Buying before selling	Breaks a chain, repaid when your home sells	Moving home
Unmortgageable property	Funds a purchase until it is fit for a mortgage	Refurbishment finance
Refurbishment or conversion	Funds the purchase and works, then refinance	Refurbishment finance
Development	Staged funding for building projects	Development finance
Business cash flow	Short-term funds secured on property	Commercial mortgages

Which situations do lenders see most?

These are illustrative situations, not Option Finance client outcomes.

How much can you borrow?

Lenders usually lend up to around 70% to 75% of the property’s value, sometimes more with extra security. The figure quoted is often the gross loan, which includes fees and any interest added to it. The money you actually receive, the net loan, is lower.

What does a bridging loan cost?

• Interest: quoted per month and priced on risk. Lower loan-to-value and a strong exit get the best rates.
• Arrangement fee: often around 2% of the loan.
• Exit fee: some lenders charge one, often 1%. Many do not.
• Valuation and legal fees: you pay your own and usually the lender’s.
• Broker fee: confirmed in writing before you proceed.

Compare the total cost over the time you expect to need the loan, not just the monthly rate.

What does a chain-break bridge look like in practice?

This is a regulated bridge, because you will live in the new home, so you get FCA protections. Remember the Stamp Duty surcharge may apply while you own both homes, with a refund if you sell within 3 years.

What do bridging lenders check?

Check	What they want to see
The property	Its value, condition and how easy it is to sell. Some lenders value on a 90 or 180-day sale basis
The exit	A sale already under offer, an agreed refinance or other funds you can prove
Your equity	How much the loan is against the value. Lower loan-to-value means lower rates
Your plans	For refurbishment, a costed schedule of works and who is doing them
Your background	Credit history and experience, though bridging is more flexible than a mortgage
Speed	Whether the solicitors and valuer can meet your deadline

How is the interest paid?

• Retained: the lender holds back the interest for the term from the loan. Nothing to pay monthly.
• Rolled up: interest is added to the loan each month and repaid at the end.
• Serviced: you pay the interest monthly, like a mortgage. This can let you borrow more net.

What is an open or closed bridge?

A closed bridge has a fixed repayment date, for example when a sale has already exchanged. An open bridge has no fixed date, but must be repaid within the maximum term, usually 12 to 24 months. Lenders want firm evidence of your exit either way.

What is a first or second charge bridge?

Most bridging loans are a first charge. A second charge bridge sits behind an existing mortgage, usually with that lender’s consent, and costs more. See our commercial second charge guide.

Is a bridging loan regulated?

If the loan is secured on a home that you or a close family member live in, or will live in, it is a regulated bridging loan. You get FCA protections, and the term is usually capped at 12 months. The FCA’s definition of a regulated mortgage is set out in PERG 4.4 of its Handbook. Bridging on investment or commercial property is usually unregulated.

What is a bridging exit?

Every lender will ask how you will repay. Common exits:

• Sale of the property or another property
• Refinance onto a mortgage, buy-to-let or commercial mortgage once works are finished
• Other funds such as an inheritance or business proceeds, with evidence

A weak exit is the biggest risk with bridging. If a sale is slow or a refinance falls short, you may face extension fees or higher interest. If you are refinancing onto buy-to-let, check the buy-to-let mortgage guide for what the new lender will need.

How fast can a bridging loan complete?

Many bridging loans complete in two to four weeks. Simple cases with quick valuations and legal work can be faster. Speed depends as much on solicitors and the valuation as on the lender, so instruct a solicitor who knows bridging.

What Stamp Duty applies?

Bridging does not change the Stamp Duty you pay. Buying an additional home usually means the higher rates. See GOV.UK’s residential rates and guidance on buying an additional residential property.

Frequently asked questions

Speak to Option Finance about bridging

Tell us what you are buying, how much you need and how you plan to repay. We will compare lenders on total cost and speed, test your exit and line up the refinance before you commit.

Book a free initial consultation using the enquiry form below. See also our bridging finance advice.