Bridging Finance

What is bridging finance?

Bridging is short-term secured lending, typically 3 to 24 months, designed to get you from A to B when a conventional mortgage can’t move fast enough, or won’t touch the property in its current state. Instead of an annual rate, bridging is priced monthly, usually somewhere around 0.5-1%+ per month depending on the loan-to-value, the property and the strength of the case.

That makes it far more expensive than a mortgage over any length of time, which is precisely why bridging is a tool, not a home for your debt. Used for weeks or months with a clear way out, it can unlock deals nothing else can. Left running with no plan, it eats your profit alive.

When bridging makes sense

• Auction purchases: the hammer falls and you typically have 28 days to complete. Almost no standard mortgage moves that fast; a well-prepared bridge does.
• Chain breaks: your purchase is ready but your sale has collapsed. A bridge lets you complete now and repay when the sale goes through.
• Unmortgageable properties: no kitchen, no bathroom, structural issues, or anything else a mortgage valuer will refuse. Bridge, fix, then refinance.
• Refurb-to-let: buy tired, do the works, let it out, then remortgage onto a buy to let based on the improved value.
• Speed plays: a genuinely time-limited opportunity where being able to complete quickly wins you the deal or a better price.

Light refurb vs heavy refurb

Lenders split refurbishment into two camps. Light refurb is cosmetic (new kitchen, bathroom, redecoration, no structural work or planning permission) and prices closer to standard bridging. Heavy refurb involves structural work, extensions, conversions or a change of use, and sits with a smaller set of lenders who’ll want to see the schedule of works, your contractor and often your track record. Knowing which side of the line your project falls on changes both the rate and the lender list.

Regulated vs unregulated

One distinction worth understanding early: if the loan is secured on your own home (or a property you or close family will live in), it’s a regulated bridging loan under FCA rules, with the extra consumer protections that brings. Loans secured purely on investment property are generally unregulated. It changes which lenders can help and how the process runs. I’ll tell you which category you’re in from the first conversation.

The exit is everything

If you take one thing from this page, make it this: a bridging loan is only as good as its exit. The exit is how the bridge gets repaid, and there are really only two: refinance (usually onto a buy to let mortgage once the property is lettable) or sale.

My rule is simple: I plan the exit before I arrange the bridge. If the exit is a buy to let remortgage, I’ll check the end deal actually works first: will the rent pass the lender’s stress test, will the improved value support the loan you need, does the property fit criteria once the works are done? Only when I’m satisfied the way out exists do we arrange the way in. It’s the difference between bridging as a strategy and bridging as a gamble.

What bridging costs

Be clear-eyed about the full cost, not just the headline monthly rate:

• Arrangement fee: typically around 2% of the loan, usually added to the balance.
• Valuation and legal fees: you’ll generally pay the lender’s legal costs as well as your own.
• Interest, rolled up or serviced: most borrowers roll up the interest, so it’s added to the loan and repaid at the end with nothing to pay monthly; if you’d rather pay monthly (serviced interest), you’ll need to evidence you can afford it.
• Exit or early repayment terms: some lenders charge exit fees or minimum interest periods; others don’t. It matters if you plan to repay quickly.

And an honest warning, because you deserve one: if the exit slips, the costs mount fast. Rolled-up interest compounds month after month, and a bridge that overruns its term can face default rates and pressure from the lender. That’s why I build headroom into every plan (a realistic works timetable, a term longer than you think you need, and an exit checked in advance) so a two-month delay is an annoyance, not a crisis.