How a bridging loan is structured
Bridging loans are short-term, commonly arranged for 3 to 24 months, and priced as a monthly interest rate rather than an annual one. They are secured on property, usually with a first charge, and repaid in full at the end of the term rather than gradually.
Because the term is short, most borrowers do not make monthly payments. Interest is usually retained, meaning it is deducted from the loan at the start for an agreed period, or rolled up, meaning it is added to the balance and repaid at the end. Some lenders allow interest to be serviced monthly, which can increase the net amount you receive.
Most bridging lenders lend up to 70% to 75% of the property's value on a first charge. The loan to value is usually calculated on the gross loan, including any retained interest and fees added to the loan, so the cash you receive on day one is lower than the headline figure. We set this out clearly when comparing lenders, so you can see the net advance alongside the rate.
Why the exit matters most
Bridging lenders focus on how the loan will be repaid as closely as on the property itself. The two common exits are a sale of the property, or a refinance onto a buy-to-let, commercial or residential mortgage once the property qualifies.
A credible exit is one that is realistic within the term, supported by evidence. For a sale exit, lenders want to see that the price is achievable in that location and that the term allows enough time to market and complete. For a refinance exit, they look at whether the property will meet mainstream mortgage requirements, whether the rental income or your income will support the new mortgage, and whether the expected value is reasonable.
We recommend building in some margin. Choosing a term a few months longer than you expect to need costs relatively little on most products, and avoids having to extend or refinance the bridge under pressure, which is usually more expensive.
What bridging can and cannot do
Bridging suits situations where timing or the property itself rules out a standard mortgage. Typical cases include buying a property that needs work before it is mortgageable, purchasing at auction, securing a purchase before your own sale completes, and refinancing a loan that is ending.
It is not a substitute for long-term finance. Monthly rates mean bridging is more expensive than a mortgage over a long period, so it works best when the exit is clear and the term is kept as short as the plan allows.
If the property needs significant building work, a refurbishment bridge or development finance may be a better fit than a standard bridge, because the lender can release funds for the works as well as the purchase. We will point you towards the right product type before approaching lenders.
If you need finance that does not charge interest, Sharia-compliant bridging is structured around a profit rate instead.
How we compare lenders for you
Bridging lenders differ in more ways than the headline rate. Fees, how valuations are instructed, the property types and locations they accept, their appetite for adverse credit and how they treat interest all affect the total cost and whether a case completes.
We start with an indicative comparison from our panel based on your answers, then review the detail of the deal and approach suitable lenders with a clear presentation of the property, the exit and your experience. Lenders can move quickly when the valuation and legal work are ready, so we also help you line up the information they will ask for.
- An indicative comparison of lenders that fit your deal
- A clear view of the net advance, fees and interest treatment
- Introduction to lenders and support through valuation and legal work
If you or your family will live in the property
If the borrower is an individual or the trustees of a trust, and the property is, or will be, lived in by you or a close family member, the bridge is a regulated mortgage contract with additional protections. We will tell you at the outset if that applies and how your case will be handled, and Instant Quotes shows only products built for regulated bridging when you tell us so.
Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
