What is a bridging loan?

A bridging loan is short-term secured finance (typically 3-18 months) used to 'bridge' a funding gap. Interest rates are 0.4-1.5% monthly. Common uses include buying before selling, auction purchases, and property renovation. They complete in days rather than weeks but cost more than standard mortgages.

Learn more about development finance in our detailed guide.

Learn more about commercial mortgages in our detailed guide.

What is a bridging loan?

A bridging loan is short-term secured finance (usually 3-18 months) used to 'bridge' a funding gap. Common uses include buying a new property before selling your current one, auction purchases, or renovating uninhabitable properties. They're secured against property and repaid when longer-term finance or a sale completes.

How much does a bridging loan cost?

Bridging loan interest rates are typically 0.4-1.5% per month (4.8-18% annually). Additional costs include arrangement fees (1-2% of loan), valuation (£300-£1,500+), and legal fees (£1,000-£3,000). Total cost for a 6-month £200,000 bridge could be £15,000-£25,000.

How fast can you get a bridging loan?

Bridging loans can complete in 3-14 days, sometimes faster. Standard mortgage applications take 4-8 weeks. This speed makes bridging ideal for auctions (28-day deadline) and chain breaks. Having documents ready and using experienced brokers speeds the process.

What can bridging loans be used for?

Common uses: chain breaks (buy before selling), auction purchases, property renovation/development, buying uninhabitable properties, business cash flow, preventing repossession, and buying land. They're flexible but expensive, so only use when speed is essential.

Do you need a deposit for a bridging loan?

Yes, typically 20-40% deposit or equity. Some lenders offer up to 80% LTV (loan-to-value), meaning you need 20% equity. Higher LTVs cost more. If you're bridging against an existing property, the equity in that property can serve as your deposit.

How do you repay a bridging loan?

Exit strategies include: selling a property, refinancing to a standard mortgage, receiving inheritance or investment returns, or selling a business. Lenders require a clear exit plan before approving. If you can't repay, they can repossess the secured property.

Quick Answer

How Do Bridging Loans Work?

Last reviewed: December 2025

Reviewed by Jay Sabine – CeMAP Qualified – 29 years experience

Bridging loans are short-term property-secured loans lasting 3-18 months. Interest is 0.4-1.5% monthly. They complete in 3-14 days vs 4-8 weeks for mortgages. You repay when you sell, refinance, or receive other funds.

Bridging finance fills temporary funding gaps when speed matters more than cost. Unlike mortgages that take weeks, bridges complete in days. They're ideal for auctions, chain breaks, and renovation projects. However, the monthly costs mean they should only be used short-term.

Key Points

13-18 month terms typical
20.4-1.5% monthly interest
3Complete in 3-14 days
4Secured against property
5Need clear exit strategy
620-40% deposit required

Eligibility Criteria

Property as security
Clear exit strategy
Minimum 20% equity/deposit
Valuation meets loan requirements

Typical Timeframe

Application to completion typically 3-14 days. Documents needed: ID, property details, exit strategy evidence. Auctions require funds within 28 days - easily achievable with bridging.

Next Steps

1Define your exit strategy
2Get property valued
3Compare bridging lenders
4Prepare required documents
5Speak to a bridging specialist

Ready to discuss your options?

FCA regulated advice tailored to your situation

Get Bridging Quote Call Us

Related Questions

Development finance

Commercial mortgages

Auction property purchase

Property renovation finance

For more detailed information about this topic, visit our comprehensive guide:

Mortgages

Jay Sabine

CeMAP Qualified

29 Years Experience

Content reviewed: 13 January 2026

When to Use a Bridging Loan

Chain break

Buy new property before selling current one

Auction purchase

Meet 28-day completion deadline

Property renovation

Finance unmortgageable property for refurb

Development

Short-term funding for property development

Business cash flow

Unlock property equity quickly

Repossession prevention

Emergency funds to prevent sale

Bridging Loan Costs

Cost	Typical Range	Notes
Interest rate	0.4-1.5% per month	Charged monthly or rolled up
Arrangement fee	1-2% of loan	Paid on completion
Exit fee	0-1% of loan	Some lenders charge on repayment
Valuation fee	£300-£1,500+	Depends on property value
Legal fees	£1,000-£3,000	Lender's solicitor + your own

Open vs Closed Bridging Loans

Closed bridge

Fixed exit date - you know exactly when you'll repay (e.g., property sale completing)

Lower rates

Open bridge

No fixed exit date - flexible repayment within term (usually 12 months)

Higher rates

Example: £200,000 Bridge for 6 Months

Costs Breakdown

Interest (0.75% × 6): £9,000
Arrangement (1.5%): £3,000
Valuation: £500
Legal fees: £2,000

Total

£14,500

Total cost of borrowing £200,000 for 6 months

Important Considerations

Bridging is expensive - only use for short-term needs
If you can't repay, the lender can repossess
Have a clear, realistic exit strategy before applying
Use a specialist broker to find the best deal