Bridging Loans
Bridging
Loans
Bridging Loans help borrowers financially ‘bridge the gap’ when buying a property, offering short-term funding to complete the purchase.
What Is A Bridging Loan
Bridging loans, also referred to as bridge loans, are a type of short-term loan taken out when you want to borrow a significant amount of money over a short period of time.
As a type of secured loan, bridging loans require an asset to be secured against them. In most cases, this asset is one property but could be several properties, especially when borrowing larger sums.
Typically, bridging loans in the UK are taken out by landlords, homeowners, and property developers, and are used for either buying a home, property investment, or property development.
Usually, these loans are paid back over a matter of months, not years, as they’re often used while the borrower is waiting for funds to be made accessible from the sale of something else.
How Do Bridging Loans Work?
Once approved, a bridging loan provides quick access to funds, which can be used while you wait for long-term financing or the sale of another property.
Lenders assess your exit strategy to ensure you have a clear plan for repaying the loan at the end of the term.
Repayments are typically interest-only, with the full loan amount repaid in a lump sum, allowing flexibility during the short-term period.
Difference Types Of Bridging Loans
An open bridging loan is available when you don’t have a clear exit strategy, though you must still ensure repayment when due. Since these loans are riskier for lenders, they often have higher interest rates, and the lender must be confident in your ability to repay.
A closed bridging loan requires a clear repayment plan with a fixed date for full repayment, known as the “exit strategy.” The lender views this as a low-risk situation, so closed loans generally come with lower interest rates than open loans.
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Expert Guidance
Expert GuidanceUKMC helps you navigate the complexities of commercial mortgages with clarity and confidence. Our advice is tailored to your financial circumstances, credit history, and borrowing needs.
Wide Range of Options
Wide Range of Options You have access to a broad selection of commercial mortgage products. UKMC compares thousands of options to identify the most suitable solution for your business.
Tailored Solutions
Tailored Solutions Whether you are purchasing new premises, refinancing existing properties, or expanding your investment portfolio, UKMC provides guidance every step of the way. Our support ensures you make informed decisions and secure the most appropriate mortgage solution for your business.
How To Apply For A Bridging Loan
AFFORDABILITY
You’ll need to figure out how much you want to borrow. The amount you can borrow will be dependent on a wide range of factors which your adviser can explain to you
SPEAK TO A BROKER
Your mortgage broker can provide expert advice regarding the market and bridging loan rates which can help you to achieve a suitable rate.
FIND A DEAL
Your broker will compare the deals available and find the most suitable option for you.
EXIT PLAN
Lenders will want to ensure you have a clear exit plan – one that illustrates how and when you’ll repay the loan. Your adviser and accountant can help with this.
what our clients saying about us
At the end of my tether I was introduced to Sam from UKMC.
Previous advisors had failed to find me any deals worth looking at and I was feeling most despondent. Destined to continue paying waaaay too much for my mortgage.
Creative Director, TUX Creative Co
At the end of my tether I was introduced to Sam from UKMC.
Previous advisors had failed to find me any deals worth looking at and I was feeling most despondent. Destined to continue paying waaaay too much for my mortgage.
Creative Director, TUX Creative Co
At the end of my tether I was introduced to Sam from UKMC.
Previous advisors had failed to find me any deals worth looking at and I was feeling most despondent. Destined to continue paying waaaay too much for my mortgage.
Creative Director, TUX Creative Co
Things to Consider
Benefits
Speed and Flexibility
Bridging loans are designed to be quick to arrange, often far faster than a standard mortgage. This can be especially useful if you need to move quickly on a property purchase or release tied‑up funds without delay.
Short‑Term Funding Solution
They provide short‑term finance until longer‑term funding (such as a mortgage or sale of another property) is in place. This can help you secure a property at auction or bridge a gap between buying and selling.
Useful for Complex Situations
Bridging finance can be used for a range of scenarios, such as auction purchases, large renovation projects, or where traditional lending may be slower or harder to secure.
Risks and Considerations
Higher Costs
Bridging loans typically have higher interest rates and fees than standard mortgages. Because they are short‑term and often unsecured against long terms, you need to understand the total cost before proceeding.
Short Repayment Periods
These loans usually need to be repaid within a short timeframe, often between 6 and 18 months. You need a clear exit strategy, such as a mortgage offer or sale, to repay the loan when it ends.
Exit Strategy Is Essential
Lenders will expect you to outline how you plan to repay the loan. Without a credible exit plan, applications may be declined, or terms may be less favourable.
Potential for Higher Risk
If your exit plan does not go as expected (for example, a delay in property sale or mortgage offer), you could face additional costs or pressure to refinance under less favourable terms.
Not Suitable for All Circumstances
Because of their cost and structure, bridging loans aren’t ideal for long‑term borrowing. They are best used for short‑term needs where speed and flexibility are key.
Frequently asked questions
Got questions? Let’s answer them
What is a bridging loan?
A bridging loan is a short-term loan designed to help you cover a funding gap, such as buying a new property before selling your existing one or waiting for long-term finance.
How quickly can I get a bridging loan?
Bridging loans are arranged much faster than standard mortgages, often within a few weeks, making them ideal for urgent property purchases or auctions.
How much can I borrow?
The amount depends on the value of the property and your exit plan, with most lenders offering up to 70–75% of the property’s market value for residential properties.
What are the costs involved?
Bridging loans generally have higher interest rates and fees than standard mortgages, including arrangement and legal fees, so it’s important to calculate the total cost.
How do I repay a bridging loan?
Repayment is usually short-term, typically 6–18 months, and comes from selling a property, releasing equity, or securing a long-term mortgage. Having a clear exit strategy is essential.
