Bridging Finance
Everything you need to know about how bridging finance works in the UK and when you might use it
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Alternative Bridging Corporation -
Bridge Help -
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Hampshire Trust Bank -
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Octane Capital -
Precise Mortgages -
Shawbrook -
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United Trust Bank
What is Bridging Finance?
Bridging finance is a short-term loan – usually 24 months or less – that individuals or businesses can take to alleviate temporary funding gaps between buying, selling, and refinancing a property or land.
They are secured against the property being purchased or additional assets, and one of the main draws is that they are fast to arrange and provide an immediate cash injection. Additionally, they can offer a finance solution where traditional borrowing may not be suitable.
Bridging finance has been used by homeowners since the 1960s, typically as a last resort to prevent chain breaks by enabling borrowers to purchase a new property before selling their current home. Today, bridging loans have become an essential financial tool for property investors and developers, with the market now estimated to be worth £13.7 billion in the UK. It is now commonly used in various residential and commercial property transactions across the UK.
How Bridging Finance Works in The UK
As mentioned, bridging finance is secured, meaning assets are secured against the loan, usually property, or in some circumstances, high-value assets like artwork or jewellery. The loan can be secured against the property you’re buying with bridging finance, existing properties, or a combination of both. The lender can take possession of these assets in the event of a default.
A typical bridging loan term is between 1 and 12 months, though some lenders will go up to 24 months. On the Brickflow platform, we have bridging loan lenders who will arrange a 30 or 60 month bridging loan.
Having a clear exit strategy is the most important element in securing bridging finance. While standard mortgages are determined by income and outgoings, bridging finance is primarily assessed on how and when the loan will be repaid, as well as asset value and saleability.
Whether using bridging finance for property development, property refurbishment or buying land, typical exit strategies include:
- Selling another property
- Selling the property that the loan is secured against
- Refinancing through a traditional mortgage
- Refinancing/transitioning onto development finance
- Re-bridging
Depending on what the loan will be used for, bridging finance will either be a:
- Regulated Bridging Loans: Governed by the Financial Conduct Authority (FCA), these loans are secured against a property that the borrower or a close family member currently lives in or intends to live in. Find out more about regulated bridging loans.
- Unregulated Bridging Loans: Not overseen by the FCA, these loans are typically for commercial properties, investment properties, or buy-to-let properties where the borrower does not reside.
Different Types of Bridging Finance
There are different types of bridging loans available for different purposes.
Planning Bridging
For buying sites with existing properties you wish to change, or land:
- Without any planning permission
- With only outline planning permission
- With detailed planning that has to be varied in some way
Securing planning permission is a long, arduous task. A bridging loan can provide liquidity and ensure you can pay the bills throughout the process. It also improves your buying powers for development sites, whilst increasing your Return on Capital Employed (ROCE). The value-add in taking bare land to being shovel-ready is significant, whether it’s you lifting the shovel or selling on to a builder.
Planning Bridging, sometimes called land purchase bridging, can also be used for sites with planning permission that doesn’t need to be altered in any way. For example, where a site has permission for 4 residential units that a developer or builder will build out as per the existing plans, but isn’t yet ready to build (most development loans will stipulate that the build phase needs to start within 3 months of the land loan being drawn).
Purchase or refinance bridging
Pretty much what it says on the tin, purchase/ refinance bridging is used to purchase a property or refinance it. Re-finance bridging, where the existing lender is a bridging lender, is typically referred to as a re-bridge.
For example, where a property hasn’t sold or works were not completed within the term and the existing bridging lender won’t issue an extension, re-bridging with another lender is an option. Not all bridging lenders will allow it, so the number of options a borrower has are reduced.
Purchase or Refinance bridging can be used for residential, commercial and mixed-use properties. Whether for development or to retain as your business premises, alll commercial bridging loans are unregulated.
Refurbishment bridging
Ideal for properties in need of renovation or refurbishment work that can be completed in a short time scale before selling at a higher value or refinancing in order to let it out. Unmortgageable and uninhabitable properties can be funded with refurbishment finance.
Developer exit bridging
If your development project overran, or hasn’t sold yet, but you have reached Practical Completion (PC), a developer exit bridging loan offers a solution.
Some development finance lenders can get antsy when your loan term ends and might push you to sell for less than you want to, or offer an extension with expensive/ unsuitable terms. With development exit bridging, you can repay the development finance lender, sell the units or refinance under less pressure and potentially access some of the equity you’ve created in the scheme to move onto your next project.
The above categories can then be further broken down into types of bridging loans:
- Open Bridging Loans: No set repayment date (almost all bridging loans are open). The borrower will have a clear exit strategy, but are unsure of the exact timing of it. For example, their house is on the market for sale but not sold yet. Open bridge loans provide flexibility, but there will be a cut-off point when the loan must be repaid. They carry more risk for the lender, so typically have higher rates.
- Closed Bridging Loans: Have a predetermined repayment date, usually based on a known financial event. Typically, this is when a property sale has been agreed with a fixed completion date.
- First Charge Bridging Loans: First and second charge refer to which lender will recoup their debt first in the event of a borrower defaulting. Logically, first-charge loans are the primary loan against a property, and have priority over others regarding repayment. Lenders are more willing and flexible with loan arrangements when they are the first-charge.
- Second Charge Loans: These are additional bridging loans taken against an already mortgaged property and secondary to the first-charge lender in repayment priority. Rates are usually higher as lenders try to offset the perceived greater risk. The first-charge lender has to consent for a second-charge loan to be taken out. Second-charge bridging loans allow borrowers to access equity in a property without fully replacing the first-charge loan, i.e. remortgaging.
Are you in the process of exploring bridging financing options? Compare bridging loans through Brickflow.
Who Uses Bridging Finance?
Bridging finance in the UK is widely used across the property sector because it can be structured around the asset and the exit strategy rather than borrower eligibility or financial profile.
- Limited companies: Commonly use bridging loans to purchase, refurbish or refinance property through Special Purpose Vehicles (SPVs) or trading entities.
- Portfolio landlords: Use bridging finance to acquire properties quickly, refurbish units, or release capital between refinancing events across multiple properties.
- Overseas investors: Can access UK bridging finance when the loan is secured against UK property, even if the borrower is based abroad. However, the number of lenders offering products for non-UK residents is significantly reduced.
Take a look at our bridging loan eligibility guide to determine whether you are eligible for a bridging loan.
Key Benefits of Bridging Finance
Bridging finance is designed for speed, flexibility and transactional certainty, and for property investors, it substantially widens market opportunities.
- Speed: Funding can complete in as little as 3 days in certain transactions, with around 14 days being the typical timescale.
- Creates opportunities: Enables purchases that traditional lenders won’t fund, such as auction properties, uninhabitable homes, land without planning, or heavy refurbishments.
- Flexible repayment: Interest is typically rolled up and repaid at exit, rather than serviced monthly, so monthly affordability is not a factor.
- Early repayment flexibility: Most loans don’t carry early repayment charges, though minimum terms may apply.
- Broader underwriting: Loans are typically assessed on asset value, project viability and exit strategy, rather than borrower income or credit profile.
- Acts as an immediate cash injection: Being a ‘cash buyer’ with bridging finance gives you a competitive edge on hotly contested sites or properties.
When Bridging Finance May Not Be Suitable
Bridging finance is undeniably useful, especially when you understand how it works and the pros and cons involved, but there are of course circumstances when bridging finance might not be suitable.
Example scenarios where bridging finance should be avoided:
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No clear exit strategy: Bridge loans are short-term borrowing (typically 1-24 months), therefore it’s essential to have a reliable exit plan that can be achieved within the term.
- Undecided on whether to exit via sale or refinance: As above, lenders need to see a clear exit, and a vague ‘I might sell or I might refinance’ won’t help you secure a loan. Multiple exit options are possible, but they all need to be sufficiently detailed.
- Cost sensitivity: Bridging finance typically has higher interest rates and fees than traditional borrowing, so where budget or profit margin is tight, it might not be affordable. There will likely be even higher default interest rates if the loan is not repaid by the
end of the term.
- Long-term funding needs: A bridging loan is not an alternative to a mortgage. Read more in bridging vs mortgage.
Other Risks and Considerations
Being aware of the risks of a bridging loan from the outset can help you make the right financial choice.
Some further things to bear in mind when weighing up bridging finance is that they require a personal guarantee (if borrowing through a corporate entity), meaning the borrower has personal liability for the debt, and lenders can repossess the securing assets and realise the guarantee in the event of a default.
Also, interest is retained (added to the loan and paid at the end of the term), therefore compounding, i.e. interest is paid on interest.
Always consider your project objectively; are there other types of longer-term finance that you could use with lower costs than a bridging loan? Is your exit strategy realistic and achievable? It’s all that stands between you and your assets being repossessed, so you’ll want to ensure it’s foolproof.
To find out more about potential risks of using bridging finance, take a look at our guide on the pros and cons of bridging loans.
Bridging Loan Alternatives
Bridging finance works for many situations, but some alternative options may be better suited:
- Personal Loans: These are for smaller amounts, with longer repayment periods but lower interest rates than bridging finance. They can be used for home renovations or extensions
- Property Development Finance: While bridging loans can work for some property development projects, such as refurbishments and renovations, development finance would be used for ground-up developments and larger (4x units and above), heavy refurbishment/conversion projects
- Commercial Mortgages: These are used for purchasing commercial properties. The loan is based on a longer period, usually 15-25 years. Rates are usually lower than bridging finance
- Mortgages: For long-term financing needs with relatively low-interest rates
Speak to a specialist in commercial property finance to ensure that a bridging loan is the right fit for your circumstances.
Bridging Finance vs a Traditional Mortgage
Bridging finance and traditional mortgages serve different purposes in property transactions. A mortgage is designed for long-term ownership, typically running for 15–35 years with small monthly repayments of interest + capital (or interest only). The debt amortises over the term of the loan, and they will typically have lower interest rates than bridging.
Bridging finance, by contrast, is short-term capital used to temporarily fund a property / land purchase. Loans can be arranged within days (though circa 14 days is the typical timeframe) and repaid in full plus interest through a defined exit strategy, such as selling the property or refinancing onto a mortgage.
The underwriting approach is therefore different. Mortgage lenders focus heavily on borrower affordability, income verification and long-term repayment capacity, while bridging lenders focus on the property value and the credibility of the exit plan.
Cost of a Bridging Loan
Bridging loans are not as expensive as people think. When considering the overall cost of your project, a bridging loan could save you money. Being able to transact quickly gives you buying power and the ability to negotiate over your competition.
Costs are typically driven by interest rate, leverage (LTV), loan term, and transaction fees.
- Rates: Starting from 6.8% (0.57% per month) and determined by risk factors such as LTV, property type and condition, planned project, exit strategy and your own strength as a borrower, primarily your experience of doing the same, net asset value, and credit file.
- Leverage: Most UK bridging lenders lend up to 75% LTV on a gross basis, meaning a borrower typically contributes at least 25% equity. Better rates are often available for 40% or more equity input.
- Interest structure: Interest is commonly rolled up and repaid at exit, although some loans allow serviced monthly interest. It’s normally charged on a daily basis, so you only pay for what you use. Some lenders charge monthly, but try to avoid this if you can, otherwise redeeming partway through a month means you pay a full month’s interest.
- Typical fees: Valuation, survey, your own and the lender’s legal fees, lender arrangement fees (often up to 2% of the net or gross loan), broker fees, and exit fees (they do exist but are not that common for bridging loans; instead lenders might stipulate a minimum loan term, typically between 1 and 6 months).
For a detailed breakdown of rates, fees and how lenders calculate pricing, head to our guide How Much Does a Bridging Loan cost?
N.B. Serviced bridging loans are not common, and less popular with lenders as the assets are often not income-producing, and they want the security of knowing the interest is paid upfront. If a lender does allow a borrower to service the loan, they’ll want to be very comfortable that the loan is affordable.
How to calculate the overall cost of a bridging loan
The overall cost of a bridging loan = loan amount + interest charges + fees.
Every lender and every loan will be different. The most accurate way to calculate the cost of a bridging loan is by using Brickflows bridging loan calculator.
You can compare interest rates, maximum LTV ratios, lender fees and more. It takes just 2 minutes and will help you to make an informed decision on your finances.
Bridging Finance Application Process & Criteria
The easiest, most efficient bridging finance application process is via Brickflow.
It takes seconds to run your property numbers through Brickflow’s bridging loan calculator and get live options from the breadth of the market:
- SEARCH & COMPARE loans from 150+ lenders on Brickflow
- RECEIVE a same-day DIP & shortlist your preferred lender
- APPLY for a loan with your intermediary or a Brickflow partner
We’ve taken the heavy lifting out of the loan search and created a seamless online application process:
Presentation
A professional presentation is key to approval. Brickflow’s online application form covers everything lenders need to make quick, confident credit decisions, covering as a minimum:
- Property details, price, location, ownership
- Your experience in property investment/development
- How the loan will be used
- Exit strategy and timeline, plus secondary plans if your exit strategy isn’t achieved
- Budget and cash flow on the project–does the bridging loan cover the total costs, and where is the shortfall coming from if not?
- Details on market research and comparables
Documentation
Start gathering supporting documents as soon as possible, such as ID documents, financial information, etc.
Underwriting
The lender completes the underwriting process and makes a formal offer. Solicitors are engaged on both sides, and your loan manager will ensure you’re happy with the offer and T&Cs.
Funds
When all sides are happy with the offer, and the necessary legal work is complete, funds are released into your bank.
Why Bridging Lenders Are Able To Transact Faster
Transacting quickly is one of the key benefits of a bridging loan, and certain factors make it possible.
Loan Application and Approval can be quick because it’s based on asset valuations and the exit, rather than lengthy personal financial due diligence or validating a full property development appraisal. Bridging loans also tend to be unregulated, cutting the paperwork and form-filling
Automated valuations (AVMs), completed instantly, are becoming more popular. Lenders will only want to use these when lower leverage is requested, and there is little to no improvement work to be done. In this case, loans can be completed in a few days.
Like most things, you pay more for speed and convenience, hence why interest rates are usually higher than other finance types and lenders price the perceived risk of the deal into the loan.
What is the criteria for securing a bridging loan?
Typical baseline criteria include:
- Borrower profile: Applicants must be 18+. Borrowers can be individuals, partnerships, or limited companies. UK residents have the widest lender choice, though non-UK residents and UK nationals abroad can still access bridging finance with some lenders.
- Loan size: Most lenders consider loans from £25,000, though in practice many prefer £150,000+ transactions.
- Security: A bridging loan must be secured against property or other acceptable assets.
- Exit strategy: A clearly defined repayment plan, typically sale of the property or refinance onto a mortgage or development loan.
Other factors that can influence lender terms include credit history, deposit size (often 25–40% equity), and borrower experience.
For a full breakdown of lender requirements, read our bridging loan eligibility criteria guide.
Compare Bridging Loans
Searching for a bridging loan on Brickflow is the fastest, easiest way to find the best loan for your circumstances. You can compare like-for-like bridging loans from over 150 lenders, see live borrowing costs and filter loans based specifically on what you need.
A search takes just seconds, covers the breadth of the market and could save you enough money to start another project.
Does my income and financial situation affect my eligibility for bridging finance?
No, not necessarily. Bridging loans are assessed on the value of the property or assets it’s secured against, the strength of the project and the viability of the exit strategy (how it will be repaid).
However, most lenders will consider your income, financial situation and credit file when assessing an application to help determine their level of risk and the rates they will offer. A stronger financial position can help to bolster your application and give lenders confidence in your ability to repay your debt.
Can retirees on pension successfully apply for a bridging loan?
Yes. Again, your equity, assets, project strength and exit strategy are more important than employment income, so being retired won’t prevent you from securing a bridging loan.
Is a property valuation necessary for securing a bridging loan?
Yes, lenders will carry out a professional property valuation on both the property being purchased with the loan and the property/assets used to secure it. The valuation helps a lender to determine their lending parameters.
Is it possible to secure bridging finance covering 100% of the property value?
A lender can offer a ‘cashless’ deal, by taking additional security from the borrower; this can be a first or second charge against another property. For properties that are distressed or BMV (below market value) then some lenders will consider higher than 75% LTV (on a gross loan basis). A typical example might be a lender offering 90% of purchase price and 75% of market value. The lender would need to believe the narrative as to why there is a discount. A strong borrower balance sheet will also be helpful. Above 90% LTV is possible, but only in very rare circumstances.
What is the maximum term for a bridging loan?
Most lenders will want bridging finance to be repaid within 18 months, but up to 24 months is available with some. Extending a bridging loan is not guaranteed and a lender can make it prohibitively expensive to discourage this behaviour, therefore it might be more financial beneficial to re-bridge with another lender.
Can a bridging loan be converted into a commercial mortgage?
Yes, where bridging finance has been used to purchase or refurbish a commercial property, the borrower can repay by transitioning onto a long-term commercial mortgage.
This will be with a different lender, who specialise in commercial mortgages, and subject to whatever eligibility criteria they require from borrowers.
In some circumstances, the bridging loan lender might require the commercial mortgage to already be pre-agreed.
The same applies for converting a bridging loan into a residential mortgage but it will be subject to the eligibility and criteria for residential mortgage lenders, including ‘stress testing’ affordability with a higher rate.
How does the cost of a bridging loan compare to a traditional mortgage?
Traditional mortgages rates soared through 2022 and 2023 as the base rate increased, making repayments painfully expensive for many borrowers. In 2023, mortgage rates reached 6%+, though have since come down, averaging around 4% as of early 2024. When arranging a mortgage, the fees can range from 0% to around 1.5%.
Bridging finance currently has interest rates starting at 7% (yearly), and arrangement fees of around 2%.
Are monthly repayments required on a bridging loan?
Interest on a bridging loan is usually rolled-up into the total loan and repaid at the end of the. If a borrower with an unregulated loan has sufficient cash flow, they can opt to pay the interest charges monthly.
The interest is calculated on a monthly basis and the rolled interest is compounded, so the monthly payments are effectively increasing across the loan term.
What is the typical timeframe for receiving bridging loan funds?
After submitting your application for a bridging loan, the typical timeframe for the funding to be released is around 2 weeks - this timeline is primarily driven by the time it takes the lender’s valuer to complete a report and for the solicitors to complete property searches. However, where a lender works with an AVM (automated valuation model) and accepts title insurance and therefore does not require searches, then completion can be as quick as a few days.
If you’re working with a specialist bridging finance lender, you can expect to receive a Decision in Principle (DIP) back within 24 hours. (At Brickflow, you can receive a DIP within hours of applying – our record is 8 minutes!)
If the bridging loan is being used to fund a residential property purchase that you will live in, the loan will be regulated and therefore requires more lender due diligence, paperwork and also a borrower cooling-off period, so the completion time can be longer, assume 4 to 6 weeks.
Find out what factors can delay or speed up your application in our article How long does it take to get a bridging loan?
What criteria must be met to qualify for bridging finance?
The two main criteria you must meet for a bridging loan are having a relevant value of securing assets and having a solid exit strategy. The security can be property or in some cases, other high value assets like artwork / jewellery.
Then the criteria for borrowing will depend on the loan type and the bridging loan lender, but typical criteria that you’ll have to meet include:
- Age 18+
- An individual, sole trader, partnership or Ltd Company
- UK resident or UK national living abroad (there are a handful of products for non-UK nationals)
- Looking to borrow £25,000 - £60 million (as a general guideline, but loans can go beyond this upper limit)
- Require the loan for between 1 and 24 months (12 months for regulated bridging loans)
- Have a deposit – bridging finance has a max of 75% LTV
- Using the loan to fund land/site purchases, new builds, refurbishments, conversions, developer exit, re-bridge.
To understand what you can borrow, how much it will cost and what criteria you will have to meet, run your numbers through a Brickflow bridging loan search. It takes just 2 minutes and gives you comprehensive details of live loans from across the market.
Click here to compare loans.