Getting a bridging loan can seem daunting at first.
But you know what?
It’s much easier when you know what to expect. Whether you’re buying at auction, dealing with a broken chain or starting a development project, this guide will take you through it all.
A bridging loan is your financial stepping stone – it’s there when other funding options won’t work.
These short term property loans last from a few months to 2 years and are all about speed and flexibility.
Understanding Bridging Loans: What They Are and Who Uses Them
Let’s start with the basics.
A bridging loan works just like it sounds – it’s a loan that bridges a financial gap.
Think of it as a short-term solution when you need funds quickly, usually for property related purposes. Unlike standard mortgages that can take months to arrange, fast bridging finance can be set up within days.
The loan is secured against property, which means your property acts as security for the lender.
You can borrow anywhere from £150,000 to several million pounds, depending on the property value and your circumstances.
The loans are always for a short period, most run for 12 months, though some lenders offer terms up to 24 months.
You’ll find bridging loans particularly useful in situations like:
Property developers often use them to buy and renovate properties that traditional lenders won’t touch – like that run-down house with amazing potential. Once the work’s done, they either sell for a profit or refinance with a standard mortgage.
Perhaps you’ve found your dream home but haven’t sold your current property yet. A bridging loan lets you secure the new place while waiting for your existing property to sell. This prevents you from missing out on opportunities or losing your place in a property chain.
Business owners sometimes use bridging finance too. Maybe you need to act fast on a commercial property opportunity, or you’re waiting for long-term funding to come through. Commercial bridging loans provide that quick injection of capital when timing really matters.
Auction buyers particularly benefit from bridging finance. When the hammer falls, you need to complete within 28 days – much faster than a traditional mortgage can manage. An auction bridging loan helps you meet these tight deadlines.
Bridging lenders focus more on how you’ll repay the loan, rather than your income or credit score. This makes them more accessible to people who might struggle with conventional lending criteria.
Before You Apply
Before you start filling in any forms let’s make sure this is the right path for you.
Bridging finance works differently to standard mortgages – lenders focus more on your property and repayment plan than your income or credit score. That’s good news if you’re self employed, have a complex income set up or a less than perfect credit history.
You might be surprised who can apply.
Property buyers, companies, developers and even UK expats can get bridging finance. What matters most is having a solid plan to repay the loan and a suitable property as security. Joint loans are also available if you need to buy with a spouse or jv investor.
Let’s get prepared.
Having your paperwork in order will make everything easier later.
You’ll need basic ID and proof of address – the usual stuff like your passport or driving licence and recent utility bills. You’ll also need information about the property you’re using as security – its current value and condition.
For business applications you’ll want recent bank statements and company accounts to hand. But don’t worry too much about perfect paperwork – bridging lenders are generally more flexible than traditional mortgage providers.
How a Broker Makes Your Life Easier
A good broker does more than just find you a loan.
They take time to understand your specific situation and what you’re trying to achieve. Maybe you need the fastest possible completion for an auction purchase, or perhaps getting the lowest interest rate matters most.
Your broker will tailor their search accordingly.
They also have access to the whole market, including lenders who don’t work directly with the public.
Some of these lenders offer better rates or more flexible terms than you’d find elsewhere. Your broker knows which lenders are most likely to approve your particular circumstances, saving you from making multiple applications that could harm your credit score.
Making Your Application Stronger
Experienced brokers know exactly what different lenders look for in applications.
They’ll help you present your case in the best possible light, highlighting the strengths of your proposal and addressing any potential concerns upfront. This inside knowledge often means the difference between approval and rejection.
A broker knows how to speak the lender’s language and present your application in a way that makes sense to them.
Saving Time and Money
The application process moves faster with a broker.
They handle the paperwork, chase up lenders, and keep things moving. When questions or issues come up – and they often do – your broker deals with them promptly, often before you even know there’s a problem.
While brokers can charge fees for their service, they often save you money overall. They might negotiate better interest rates, find lenders with lower fees, or help you avoid costly mistakes in the application process.
Getting the Best Deal
Different lenders specialise in different types of loans or situations.
Some prefer straightforward residential bridges, while others focus on complex commercial deals. Some offer better terms for heavy refurbishment projects, others for simple property purchases.
Others are comfortable offering non-status bridging loans, which don’t require any credit checks.
Your broker matches you with lenders who specialise in your type of deal. They know which lenders are currently offering the best terms for your circumstances and which ones are most likely to understand your exit strategy.
Application Steps
It all begins with a chat about your plans.
This isn’t just box ticking – it’s about finding the right solution for you. You’ll discuss how much you need to borrow, what property you’re using as security and your timeline.
Be open about your plans during this chat. The more information you share the better guidance you’ll get. This is also when you’ll find out about costs and timelines.
Decision in Principle
Once your broker has a good understanding of what you need, they can begin searching for matching lenders.
This then moves on to getting a basic decision in principle (DIP) from their suggested lender.
Moving to Formal Application
With a DIP sorted you can proceed to making a full application.
Your broker or lender will use your documents to build a full picture. They need to know where you’re starting from and where you’re heading.
This is where you tell your story clearly. The better the lender understands your plans the more likely they are to offer you good terms.
Credit Checks
Looking into your credit history is one of the first checks most lenders do. They can see how you handle your finances and debts.
As the loans are short term, lenders can be flexible on those credit profiles that may contain a few blips or even some bad credit.
For more serious credit issues you may need to look at a non-status bridging loan. These are a bit more expensive, but the lender doesn’t require any credit checks for loans below 70% LTV.
Property Assessment
The lender needs to have the property assessed, and will ask a professional valuer to visit your security property. They’ll look at its current condition, check the local market and consider similar sales in the area.
If you’re planning improvements or developments they’ll factor that in too.
If your loan to value is low, maybe 70% or less, a lender will often only need a desktop valuation or use an automated valuation model. This means the property assessment stage happens much quicker.
Legal Checks and Approval
This is where the detail is checked. The lender’s team will review everything while solicitors will check property ownership, existing mortgages and planning permissions.
Stay in touch during this period – quick responses to questions will keep things moving. Most delays happen when communication breaks down so keep those lines open.
In most situations there will be two firms of solicitors, yours and the lenders. If speed is paramount then you could consider a lender that accepts dual representation, where one legal firm acts for both parties.
Funds Release
The final stage brings your formal offer and all the borrowing terms.
Once signed funds will be released within a couple of days. Some lenders can even do same day transfers if required – perfect for really urgent situations.
Let’s talk bridging loans!
Reasons for Needing a Bridging Loan
You will either need to borrow money to buy a property or to raise some extra cash. Pretty much all reasons are acceptable.
If you’re buying a property you could require a bridge loan for speed, or to avoid a property chain, or just because it’s the simplest process.
There are a number of ways you can raise capital but few can match the speed and versatility of a bridge loan. You could use the money to help purchase a car, holiday or another property. It can be used for business cashflow, buying out an ex or settling a tax bill.
Read more: What can a bridging loan be used for?
How to Make Your Application More Likely to Succeed
Your repayment strategy is really important and requires thought and planning. Lenders will need to know (and approve) your exit strategy before agreeing to the loan terms.
Whether you’re selling a property, switching to a regular mortgage or using incoming funds make sure your plan is realistic and well supported.
The property you’re using as security also plays a big part. Properties in good condition in good areas get better terms. Lenders always think about how easily they could sell if needed.
Timeframes
Most applications take 5-10 days from start to finish.
Some can be done in 3 days, others can take several weeks. Good preparation and clear communication is key.
Want it to go fast?
Have your paperwork ready from the start, choose an experienced broker and be available for questions. Using the lender’s preferred solicitors will help too.
Fees and Interest
Besides interest you’ll pay arrangement fees (usually 2% of the loan) plus valuation and legal costs. Many lenders let you add these to the loan rather than pay upfront.
You need to budget for two sets of legal costs, as you will be paying for the lender’s solicitor as well as your own.
Interest options are flexible too. You can roll it up and pay everything at the end which helps with cash flow during your project.
Common Mistakes to Avoid
Most application issues come down to preparation and communication.
Taking the time to get your documents in order before you start will save you headaches later. Keep everyone updated and you’ll keep the momentum going.
Your repayment strategy needs to be well supported. This might mean property marketing plans, mortgage agreements or proof of incoming funds.
Understand the difference between a gross loan and a net loan so you’re not left short of cash. The net loan is the cash amount that you will receive, after fees and interest has been set aside.
Getting Started
Applying for a bridging loan can feel like a big step but it’s much more manageable when you break it down. Every application is different because every situation is unique.
Take your time to gather what you need, think through your repayment plan and consider getting help with the process. With good preparation and support you’ll be more likely to get the funding you need when you need it.
The bridging market is changing and more options are becoming available for property buyers and developers. Know how it works and you’ll be ready when they do.
FAQ
Typically, you’ll get your money in 5-10 days from submitting a complete application. Some straightforward cases can complete in just 3 days, while more complex situations might take a few weeks. Having your paperwork ready and responding quickly to queries speeds things up considerably.
Read more: How Quickly Can You Get a Bridging Loan?
Unlike traditional mortgages, bridging lenders care more about your property and exit strategy than your credit score. While a good score helps, you can still get approved with less-than-perfect credit. You might pay a slightly higher interest rate, but most lenders focus more on how you’ll repay the loan.
Read more: Can you get a bridging loan with bad credit?
Most lenders look for at least a 25% deposit, meaning they’ll lend up to 75% of the property’s value. Better rates are available for larger deposits and we have lenders that will go to 80% LTV.
Read more: Do You Need a Deposit for a Bridging Loan?
Your exit strategy needs to be realistic and well-documented. Selling a property? Show comparable sales and estate agent valuations. Refinancing to a mortgage? Have an agreement in principle ready. The more evidence you can provide, the stronger your application looks.
Read more: Bridging loan exit strategies
No, bridging loans always need property security. This could be the property you’re buying, your current home, or another property you own. Some lenders will consider multiple properties as security if needed.
Yes, most lenders allow early repayment. Some charge exit fees or have minimum interest periods, but many offer flexible repayment terms. Check the specific terms before signing, as policies vary between lenders.
Read more: Can You Pay a Bridging Loan Back Early?
Yes, you’ll need a solicitor to handle the legal aspects. Some lenders let you use their solicitor for both sides (called dual representation), which can save time and money. Others require separate representation.
Read more: Do I Need a Solicitor for a Bridging Loan?
A first charge means your bridging loan is the primary loan secured against the property. A second charge means there’s already another loan (like a mortgage) in place. Second charge loans usually cost more and require permission from the first charge lender.
Read more: First, Second & Specialist Charges in Bridging Finance
Yes, bridging loans are perfect for auction purchases where you need funds quickly. Many lenders specialise in auction finance and can meet the typical 28-day completion deadline. Have your broker lined up well before bidding.
