What is a bridging loan?

A bridging loan is short-term borrowing typically used to unlock funds fast, often in a matter of days rather than months. It could be ideal if you need to borrow quickly and have a clear way to repay the loan. Say for instance, you want to buy a property before you’ve sold yours, or you’re snapping up an auction bargain and need the cash sharpish.

Bridging loans are often used by property buyers, landlords and developers, but they can work for anyone who needs a short-term cash injection to cover a gap in their finances. It’s a handy short-term fix for all sorts of situations. From buying a doer-upper that isn’t mortgage-ready, to paying urgent tax bills or even sorting out divorce settlements.

These loans are secured against an asset, usually a property, which gives the lender reassurance they’ll get their money back. But this also means there’s a risk: if you can’t repay then your home (or whatever you’ve secured the loan against) could be at stake. That’s why it’s important to have a solid repayment plan in place.

Are you eligible for a bridging loan?

Bridging loans are designed to provide short-term financing solutions. While specific criteria can vary between lenders, there are some common factors they’ll consider:

  • Loan-to-value (LTV) ratio: The more equity you have, the better the deal you might get.

  • Credit history: A strong score helps, but some lenders are more flexible than others.

  • Security: You'll typically need to provide property or another asset as security. The value and type of this asset can influence the loan amount and terms.

  • Property condition and plans: If you’re doing up a property or buying one to sell it on quickly, lenders will look at what state it’s in and what you intend to do.

  • Exit plan: Lenders will want to see a clear plan for how you intend to repay the loan, such as through the sale of a property or securing long-term financing.

The more of these boxes you tick, the better your chances may be of securing a competitive bridging deal.

As with any mortgage or secured loan, your home or other assets may be repossessed if you do not keep up with repayments.

How do bridging loans work?

When it comes to bridging loans, you have options to consider, depending on your needs and flexibility:

Open bridging loans

These are flexible loans with no fixed repayment date, so you can pay them off whenever you have the funds available. Lenders generally expect you to clear the debt within a year, though some may offer longer repayment terms. It’s an option if you need more breathing room, but just be mindful of the clock ticking!

Closed bridging loans

With closed loans, you’ve got a set repayment date. This is usually linked to when you expect your funds to come through, like when your property sale completes. These loans tend to be cheaper than open ones, but since there's less wiggle room on repayment, they might not be as flexible.

Interest

The interest can be paid monthly or rolled up. If you choose to roll up the interest, you don’t have to make monthly payments. Instead, you settle the whole lot – loan plus interest – in one go when the term ends or when you exit the loan.

Whichever option you go for, lenders will ask you for a solid ‘exit plan’ - basically, how you plan to pay it back (like from a property sale or other funds). So, be ready to outline your plan before you borrow!

How much can I borrow with a bridging loan?

Bridging loans are designed to be flexible, and the amount you can borrow largely depends on the value of the property you're using as security. As a general guide, bridging loan lenders tend to offer up to 75% loan-to-value (LTV). So, if your property is valued at £260,000, you could potentially borrow up to £195,000. In terms of minimum and maximum loan amounts, lenders typically offer bridging loans from anywhere between £5,000 or so to several million.

Additionally, the type of charge on your loan affects how much you can borrow:

First charge bridging loan

With a first charge bridging loan, the lender has first dibs on your property if things go wrong, so they’re usually happy to lend more, and often at lower interest rates.

Second charge loan

A second charge loan sits behind an existing mortgage, so you might not be able to borrow as much, and you’ll usually need permission from your main mortgage lender first.

As bridging loans are short-term, the interest rates can be higher than what you'd get with a typical mortgage, though you’ll only pay that higher rate for a much shorter time – often just a few months. That said, first charge loans can offer lower interest rates than second charge mortgages, which might be another option available to you.

What are the pros and cons of a bridging loan?

Bridging loans can be a handy short-term option when you need access to funds quickly. But like any type of finance, they come with their own set of pros and cons.

Here's what to weigh up before you decide if a bridging loan is right for you.

Pros of bridging loans

  • Quick access to funds: Bridging loans can be arranged swiftly, often within a few days, making them ideal for time-sensitive situations like property auctions or preventing a property chain from collapsing.

  • Interest payment options: Borrowers can choose from monthly interest payments or rolled-up interest, where the interest is paid at the end of the loan term.

  • Can help with unmortgageable properties: If a property has issues like structural defects or a short lease, a bridging loan may give you the funds to fix the problem before switching to a standard mortgage.

  • Can borrow large sums: Bridging loans are often available in high amounts, especially when backed by valuable property, giving you more financial firepower for big purchases.

Cons of bridging loans

  • Higher interest rates and fees: Bridging loans can be expensive in comparison to other types of mortgages and loans as interest is applied daily rather than annually. Plus there may be additional fees to consider, such as valuation, arrangement, exit and legal fees, potentially making them more expensive than traditional loans.

  • Risk of repossession: As these loans are typically secured against property or other assets, failure to repay can lead to the lender repossessing the asset to recover the debt.

  • Requirement for a clear exit strategy: Lenders typically require a well-defined plan for repaying the loan, such as the sale of a property or securing long-term financing. Without a solid exit strategy, obtaining a bridging loan can be challenging.

Loan guides

Answering your questions about bridging loans

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Page updated on 19th September 2025, Reviewed by Richard Groom