Bridging Loans

Interest rates for bridging loans are usually higher than standard mortgages because they are designed for short-term borrowing. Rates are commonly charged monthly rather than annually and can vary depending on factors such as loan size, loan-to-value, property type, and the borrower’s circumstances.

Bridging loans can often be arranged more quickly than traditional mortgages. In straightforward cases, approval and completion may take place within a few days, although more complex cases involving valuations, legal work, or multiple securities may take longer.

The amount you can borrow with a bridging loan depends primarily on the value of the property being used as security and the lender’s maximum loan-to-value limits. Loan sizes can range from relatively small amounts to several million pounds, depending on the asset and lender criteria.

Bridging loans are secured against property. This can include residential property, commercial buildings, mixed-use property, or land. In some cases, lenders may accept more than one property as security to support the loan.

Bridging loans are intended for short-term use. Loan terms are commonly between 3 and 12 months, although some lenders may offer terms of up to 24 months depending on the exit strategy and circumstances.

Yes, many bridging loans allow early repayment. Some lenders calculate interest on a monthly basis, while others may apply a minimum interest period. The exact terms depend on the lender and should be checked before proceeding.

A bridging loan is commonly used to bridge a short-term funding gap. Typical uses include buying property at auction, purchasing a new property before selling an existing one, funding refurbishment works, or resolving chain breaks.

Yes. Lenders require a clear exit strategy, which explains how the loan will be repaid. Common exit strategies include selling the property, refinancing onto a longer-term mortgage, or releasing funds from another asset.

In many cases, yes. Bridging loans are often used for properties that are considered unmortgageable by traditional lenders, such as those needing refurbishment or without a working kitchen or bathroom. The property’s condition and the exit plan will be assessed.

Not always. Many bridging lenders focus primarily on the property value and the exit strategy rather than personal income. However, income may still be considered in some cases, particularly where interest is serviced monthly.

Yes. Bridging loans are available to both individuals and limited companies, including special purpose vehicles (SPVs). Lender criteria may differ depending on the borrower type and structure.

Some bridging loans are regulated by the Financial Conduct Authority, particularly where the loan is secured against a borrower’s main residence. Loans secured on investment or commercial property are usually unregulated.

Bridging loans can be suitable for first-time buyers or investors in certain circumstances. Lenders will assess the borrower’s experience, the property, and the proposed exit strategy before making a decision.

In addition to interest, bridging loans may involve arrangement fees, valuation fees, legal costs, and exit fees. The exact costs vary by lender and should be considered when assessing overall affordability.

No. While both are forms of secured borrowing, a bridging loan is designed specifically for short-term use and flexibility, whereas a mortgage is typically a long-term financing solution with different affordability assessments.