Bridging Finance

Bridging finance is a type of short-term loan that typically lasts between 1 to 24 months. There are several reasons that you might choose bridging finance. For example, to provide quick finance during the sale of a property, if you need to break a chain, or as a stop gap until long-term funding is obtained.

Typically, the Loan to Value (LTV) of a bridging loans range from 60% to 80% and is often considered to be one of the most useful forms of short-term finance when sourcing loans for property development purposes due to its flexibility and speed at which it can be made available.

Our team of specialist finance expert advisers are on hand to help property buyers access flexible, fast short-term funding for residential and commercial property acquisitions of any construction type or property condition.

We can arrange funding quickly and efficiently for bridging loans from £25,000 to £50,000,000. Funding can be arranged within 48 hours with the correct paperwork supplied. From simple loans to complex deals, we are here to help you find the very best loan outcome available.

To discuss your specialist finance needs, call us on 0203 871 5901 or submit our form.

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Frequently Asked Question – Bridging Finance Explained 

A bridging loan is a short-term financial arrangement, usually lasting around 12 months. Its defining feature is its brief duration, with most loans repaid within approximately 8 months. Secured against a single property or can be against multiple properties.

Bridging finance is a flexible financial solution that, when used correctly, can be highly effective in various situations. It is commonly used for:

  • Property Renovation – Purchasing run-down properties in need of refurbishment.
  • Business Purposes – Easing cash flow issues or funding short-term projects.
  • Auction Purchases – Securing properties that require quick completion.
  • Fast Transactions – Ideal for time-sensitive property deals.
  • Regulated Lending – Used for chain breaks or downsizing, though typically limited to a maximum term of 12 months.

There are three main types of bridging finance:

  1. First Charge Bridging Loan – The lender holds the primary charge over the property, meaning they have the first right to repayment in the event of a sale or default.
  2. Second Charge Bridging Loan – The lender takes a secondary position behind the first charge holder, requiring their consent. This option allows borrowers to access additional funds while maintaining an existing loan.
  3. Third Charge Bridging Loan – A niche and less common option where a lender takes a third charge position. This is highly bespoke, with only a limited number of lenders willing to offer such financing.

Bridging loans typically have terms ranging from 1 to 12 months, as they are designed for short-term borrowing. However, some lenders may extend terms up to 36 months, provided the borrower can service the loan.

Longer terms, such as 3 years, are more commonly used for business acquisitions, allowing time to strengthen financial accounts and improve profitability before refinancing or repayment.

A bridging loan offers flexible repayment options, allowing borrowers to choose how they manage interest payments:

  1. Serviced Interest – Pay the interest monthly, like a traditional loan.
  2. Rolled-Up Interest – Add the interest to the loan amount, with repayment due at the end of the term.
  3. Part-Serviced Interest – Pay a portion of the interest monthly while rolling up the rest, reducing the overall repayment at the end.

For bridging loans on a borrower’s main residence, there are approximately 15 lenders, and these loans are underwritten similarly to standard mortgages.

For investment properties that have never been, and will not be, the borrower’s main home, the loan is considered unregulated. In this space, there are hundreds of lenders offering a variety of products tailored to different borrower profiles, from first-time investors to experienced and sophisticated borrowers. While unregulated loans can exceed 12 months, they typically remain short-term.

Loan amounts vary by lender, but borrowing is typically capped at 75% loan-to-value (LTV). Higher LTVs generally come with higher interest rates.

Bridging loans come with several costs, including:

  • Arrangement Fee – Usually around 2% of the loan amount, often added to the loan.
  • Admin Fees – Some lenders charge these, while others do not.
  • Valuation Costs – Most lenders require a property valuation. Some rely on desktop valuations, while others conduct full valuations (which tend to be more expensive).
  • Legal Fees – Borrowers must cover both their own and the lender’s legal costs.
  • Early Repayment Charges (ERCs) – While some lenders apply ERCs, the majority do not.

When you repay a bridging loan early, the lender will:

  1. Calculate the Interest Used – Interest is typically charged on a daily or monthly basis, so you only pay for the period you have used.
  2. Produce a Redemption Statement – This outlines the remaining balance, any applicable fees, and the final amount needed to settle the loan.

Most lenders do not charge early repayment fees, but it’s always best to check your loan terms.

If you are unable to repay your bridging loan:

  1. Loan Extension – Some lenders may offer an extension, but this is not guaranteed.
  2. Consult Your Broker – If your project is delayed, speak to your broker as soon as possible to explore refinancing or alternative solutions.
  3. Avoid Ignoring the Issue – Failing to address repayment issues could result in the lender taking possession of the secured property and selling it to recover their funds.