What is Bridging Finance?
Bridging finance is a short-term loan designed to "bridge" the gap between a purchase and longer-term funding. It's one of the most flexible tools available to UK property developers and investors — but it's not for everyone. This guide explains how it works, what it costs, and when it makes sense.
How Bridging Loans Work
A bridging loan is secured against property and typically lasts between 1 and 24 months. Unlike a traditional mortgage, which can take weeks to arrange, bridging finance can often be completed in days.
Here's the typical process:
- Application — You approach a broker or lender with your deal. They assess the property, your exit strategy, and the loan-to-value ratio.
- Valuation — The lender instructs a surveyor to value the security property.
- Offer and legal work — If approved, solicitors handle the legal due diligence.
- Completion — Funds are released, often within 5–15 working days.
The loan is repaid in full at the end of the term — either by selling the property, refinancing onto a longer-term mortgage, or through another planned exit.
What Does Bridging Finance Cost?
Bridging loans are more expensive than standard mortgages because of the speed, flexibility, and short-term nature. Typical costs include:
- Interest: 0.5%–1.5% per month (rolled up or serviced)
- Arrangement fee: 1%–2% of the loan amount
- Exit fee: 0%–1% (not all lenders charge this)
- Valuation fee: £500–£2,000 depending on property value
- Legal fees: Both your own and the lender's solicitor costs
The total cost depends heavily on the loan-to-value ratio, the property type, and your exit strategy. A broker can help you compare the true cost across lenders — which is where we come in.
When to Use Bridging Finance
Bridging loans are best suited for situations where speed matters or where traditional lending isn't available. Common scenarios include:
- Auction purchases — You have 28 days to complete after the hammer falls
- Chain breaks — Buying your next property before your current one sells
- Refurbishment — Funding works on a property that's currently unmortgageable
- Development exits — Refinancing out of development finance before units are sold
- Bridging to a mortgage — Securing a property now while a longer-term mortgage is arranged
Bridging Finance vs Other Options
| Feature | Bridging Loan | Commercial Mortgage | Development Finance |
|---|---|---|---|
| Term | 1–24 months | 3–25 years | 6–24 months |
| Speed | Days | Weeks | Weeks |
| Interest | 0.5–1.5%/month | 4–8%/year | 0.5–1.2%/month |
| Best for | Short-term needs | Long-term holds | Ground-up builds |
Frequently Asked Questions
Can I get a bridging loan with bad credit?
Yes, many specialist lenders consider applicants with adverse credit. The key factors are the property value, your deposit, and — most importantly — a credible exit strategy. Rates may be higher, but options exist across our panel of 100+ lenders.
How quickly can bridging finance be arranged?
In urgent cases, bridging loans can complete in as little as 5–7 working days. A more typical timeline is 10–15 working days, depending on the complexity of the deal and how quickly legal work can be completed.
Do I need a deposit for a bridging loan?
Most lenders require a deposit or existing equity. Typical loan-to-value ratios range from 65% to 80%, meaning you'll need 20%–35% as a deposit or equity in another property. Some lenders offer up to 100% LTV with additional security.
Next Steps
If you're considering bridging finance for a deal, we can help you find the right lender from our panel of over 100 specialist providers. Every case is different — get in touch for a free, no-obligation consultation and we'll walk you through your options.