Bridging Finance
Bridging finance is a short-term, interest-only loan secured against property, designed to "bridge" the gap between a purchase and longer-term funding. It is fast, flexible, and secured against property — but it carries significant risks and is not suitable for everyone.
What Is Bridging Finance?
A bridging loan is a form of short-term borrowing secured against a property or land. Loans are typically arranged for terms of 3 to 12 months and are usually interest-only, with the interest often "rolled up" and paid at the end of the term rather than monthly. They are designed to be repaid quickly — usually through the sale of the property or by refinancing onto a longer-term mortgage.
Because bridging loans are short-term and secured against property, they are significantly more expensive than a standard residential mortgage. They are a specialist product and should only be used where there is a clear, realistic exit strategy.
When Might Bridging Finance Be Used?
Chain Break
Complete a property purchase quickly when your buyer falls through or a chain collapses, without losing the property you want.
Auction Purchases
Auction completions typically must happen within 28 days. Bridging finance can fund the purchase fast, before a longer-term mortgage is arranged.
Refurbishment
Fund renovation or conversion works on a property that is not yet mortgageable in its current condition, then refinance onto a term mortgage.
Buy Before You Sell
Secure your new home before your current one has sold, then repay the bridge from the sale proceeds.
The Exit Strategy Is Essential
Every bridging loan must have a clear, realistic exit strategy — a plan for how the loan will be repaid at the end of the term. Common exit routes include:
- Sale of the secured property
- Refinance onto a term mortgage (residential or buy-to-let)
- Sale of another asset or receipt of expected funds
If the exit strategy fails — for example, a property does not sell or a remortgage is declined — you could face significant costs, additional interest, and ultimately repossession of the secured property.
How the Process Works
Initial Consultation
We discuss your requirement, the property, the loan amount needed, and — critically — your exit strategy (how the bridge will be repaid).
Decision in Principle
We approach specialist bridging lenders across the market to secure a decision in principle, often within 24–48 hours.
Valuation & Legal
The lender instructs a valuation and your solicitor handles the legal work. Bridging cases are typically fast-tracked.
Completion
Funds are released. You then execute your exit strategy — sale, remortgage, or refinance — to repay the bridge within the agreed term.
What Lenders Will Look At
- The property value and type (residential, commercial, semi-commercial, land)
- Your exit strategy — a clear, realistic plan to repay the loan
- Your experience as an investor or developer (for complex cases)
- The loan-to-value (LTV) ratio — typically up to 70–75%
- Your credit profile and affordability where applicable
Key Risks You Should Understand
- Higher cost: Bridging interest rates and fees are significantly higher than standard mortgages. The total cost can mount quickly if the loan extends beyond the planned term.
- Repossession risk: The loan is secured against your property. If you cannot repay it, the lender can repossess the property.
- Exit strategy failure: If your planned sale or remortgage falls through, you may be unable to repay the loan on time, incurring extra charges and potential repossession.
- Not a long-term solution: Bridging finance is designed for short-term use only. It is not a substitute for a standard mortgage.
Want to Discuss Bridging Finance?
Book a free, no-obligation consultation and I'll help you assess whether bridging finance is suitable for your circumstances.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Bridging finance is a short-term, high-cost form of borrowing secured against property. It is not a regulated mortgage contract for the purposes of the Financial Services and Markets Act 2000 in all cases — some bridging loans (particularly on investment or commercial property) are unregulated. You should ensure you fully understand the costs, risks, and your exit strategy before proceeding.
THERE MAY BE A FEE FOR MORTGAGE ADVICE. THE ACTUAL AMOUNT YOU PAY WILL DEPEND ON YOUR CIRCUMSTANCES. Andreas Mortgages is an Appointed Representative of Marklay Mortgages Ltd, authorised and regulated by the Financial Conduct Authority (FCA Ref: 1051012). Registered in England and Wales No: 16954893.