What a bridging loan is
A bridging loan is a short-term loan secured on property. It “bridges” the gap between needing money now and the money arriving later, from a sale, a long-term mortgage or the end of a project. Interest is quoted as a monthly rate and is usually kept back from the loan at the start (retained) or added to the balance (rolled up), so there is often nothing to pay each month.
When people use one
- Auction purchases that must complete in 28 days or less.
- Chain breaks, buying before your sale completes.
- Properties banks won’t lend on yet: no kitchen or bathroom, short leases, or a building in poor repair.
- Light or heavy refurbishment before selling or refinancing to a buy-to-let mortgage.
- Raising capital against property you already own, for a deposit or a business need.
Typical rates
Rates depend mostly on the loan to value (how much you borrow against the property). As a guide:
| Up to 60% LTV | 0.45% to 0.65% a month |
|---|---|
| 60% to 75% LTV | 0.65% to 0.95% a month |
| Above 75% LTV | 0.95% to 1.25% a month |
Lenders also charge an arrangement fee (often around 2% of the loan), and some charge an exit fee. You pay legal and valuation costs too. Our bridging calculator shows the total cost, what you would repay if you clear the loan early, and how the loan to value compares with what lenders will consider.
What lenders look at
The property and the exit, meaning how the loan will be repaid, matter more than your income. Expect questions about the property’s value and condition, your plan and timescale, your experience with similar projects, and any credit problems. A clear, realistic exit is the single biggest factor in getting a good rate.
How we help
- Run your figures in the free calculator. No credit check and no obligation.
- Tell us about the deal in a two-minute form. Your calculator figures come with it.
- We look at the deal against what we know of the market and pick the broker or lender best suited to it.
- We introduce you, with the details already explained, and stay on hand if you need us.
Your property may be repossessed if you do not keep up repayments on a loan secured on it. A bridging loan is short term: if your sale or refinance is delayed, interest keeps building and some lenders charge default rates.