What 100% bridging really means
Bridging lenders limit their loan to a share of the property's value, the loan to value. On a single property that is usually well below 100%, so the buyer puts in the difference. A 100% bridge closes that gap by adding a second property as security. The lender then looks at the combined value of both properties against the total loan, rather than at the purchase alone.
For example, buying a property for £200,000 with no cash would need a £200,000 loan plus fees and interest. If you own another property worth £300,000 with no mortgage, the lender is lending against £500,000 of security, which can fall within its limits. If the second property has a mortgage, only the equity above that mortgage counts, and the lender would take a second charge behind the existing lender.
So 100% bridging is not lending without a deposit. The equity in the other property does the work a deposit normally does, and that property is at risk if the bridge is not repaid.
When it is used
The most common case is an investor or developer with equity in existing property but little cash, for example after buying at auction, or while waiting for another sale to complete. It can also suit a purchase below market value, where the lender values the property above the price, though most lenders still lend on the lower of the price and the valuation.
Some buyers use a 100% bridge for a refurbishment project, with the works funded separately in stages. Others use it to secure a property quickly and then release the additional security once the first property has been refinanced or the value has gone up.
What lenders look at
Lenders treat the additional security as a full part of the loan. Expect them to value it, check its title and take a legal charge over it, with the legal and valuation costs that brings. They will want a clear exit for the whole loan, usually a refinance onto a buy-to-let or commercial mortgage, or a sale of one of the properties.
The total cost matters as much as the headline rate. Interest is usually retained or rolled up, and arrangement fees are charged on the gross loan, so the total borrowed is more than the purchase price. Use the bridging loan cost calculator to see what it adds up to over your term.
Risks and alternatives
A 100% bridge puts more of your property at risk: if the exit is late or falls through, the lender can enforce against the additional security as well as the purchase. Plan the exit before you commit, and allow for delays.
If your home would be the additional security, the loan may be regulated, and only some lenders and routes are open. We will tell you at the outset how your case will be handled. Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
Alternatives include a second charge bridge on the property you already own to raise the deposit, below-market-value bridging, or auction finance for a standard deposit-backed purchase. For building projects, see 100% development finance.
