The shape of a bridging loan
A lender lends a percentage of the property's value (the loan-to-value, usually up to 75%) for a fixed number of months (the term, usually 3 to 24). Interest is charged monthly. At the end you repay the whole loan in one go from a pre-agreed source (the exit): a sale, a refinance or a receipt from elsewhere.
It is secured by a legal charge on the property. First charge if there is no other mortgage; second charge if there is one and the first lender consents.
Gross and net
The gross loan is the amount the lender lends and the figure the LTV is measured on. The net loan is what you receive after the lender deducts the arrangement fee and, in most cases, the interest for the full term. On a £500,000 gross loan at 0.85% for 12 months with a 2% fee, the net is £439,000. Plan the deal around the net. Our calculator does this for you.
Three ways to pay the interest
- Retained: deducted from the loan on day one. No monthly payments. The standard method for projects with no income. Unused months are usually refunded if you repay early.
- Rolled up: added to the loan each month and paid at the end. More cash on day one; the lender caps it by the LTV at the end of the term.
- Serviced: paid monthly from your own money or rent. The most cash on day one; the lender needs to see you can afford it.
Regulated and unregulated
If you or a family member live in the property, or will, the loan is a regulated mortgage contract and must be arranged by an FCA-authorised adviser. Everything else, investment property, commercial property, land, is unregulated, which is what we arrange. Unregulated does not mean unprotected: the lender's terms are contractual, and the property can be repossessed if you do not repay. It means the FCA's consumer rules do not apply because you are borrowing for business.
What it costs
Interest of 0.55% to 1.25% per month depending on the deal, an arrangement fee of about 2%, a valuation, the lender's legal fees and your own, and a broker fee. Full breakdown on the rates and costs page. The total for a 12-month bridge at 75% LTV is typically 11% to 15% of the loan. Expensive compared to a mortgage; cheap compared to losing a deal, or to a development facility.
When bridging is the right tool
Buying at auction. Buying property that is not mortgageable until work is done. Completing before a sale goes through. Refinancing out of an expiring facility. Releasing equity fast. Any situation where the money is needed for months, not years, and there is a clear way to repay it.
When it is the wrong tool
When there is no exit. When the need is long term. When a mortgage would do and the timescale allows one. When the deal only works if everything goes right. A good broker will tell you which of these applies before you spend money on a valuation.
About the numbers on this page. Rates, fees and loan-to-values are typical market ranges for unregulated bridging in England, given so you can size a deal. They are not an offer. Your terms depend on the property, the exit, the lender and you.
Questions we get asked
Do I make monthly payments on a bridging loan?
Usually not. Interest is retained or rolled up, so there are no monthly payments and the whole amount is repaid at the end. Serviced interest, paid monthly, is an option where you have income.
Do bridging lenders credit check?
Yes, once you proceed. At enquiry stage we do not. Adverse credit does not stop a bridge, because the lender's main concern is the property and the exit, but it narrows the lender pool and can affect the rate.
How long can a bridging loan run?
Unregulated bridging typically runs from 1 to 24 months; some lenders go to 36. Regulated bridging is capped at 12 months. Borrow for longer than you need and repay early if you can.
Can I get 100% bridging?
Against one property, no. Across two or more, yes: a lender takes a charge on the property you are buying and on one you already own, and the combined LTV stays within 70% to 75%.
Tell us the deal.
A few numbers and a postcode is enough for a first view. Indicative terms cost nothing and commit you to nothing.