Moving house rarely goes exactly to plan.
Perhaps you’ve found your perfect home but haven’t sold your current property. Or maybe you’ve spotted an unmissable opportunity at auction but can’t arrange a mortgage fast enough.
These situations can leave you stuck between properties or watching a dream home slip away.
That’s where residential bridging loans come in useful. In the UK, bridging loans have become increasingly popular, with the market growing to over £9 billion in 2024.
More homeowners are discovering how these loans can solve property chain issues, secure auction purchases, or fund home improvements when timing is tight.
Let’s look at how residential bridging loans work, who they’re for, and what you’ll need to know if you’re considering one.
Understanding Residential Bridging Loans
A residential bridging loan is a short-term loan secured against a residential property, like a house or a flat.
They can be set up as a regulated residential bridging loan, for a house you want to live in, or an unregulated loan, for investing.
You’ll repay it either when you sell your property or arrange a new mortgage to replace it.
These loans work differently from normal mortgages. They can be arranged really quickly and lenders focus more on the property’s value and your repayment plan than your income or credit score.
How Are They Different From Commercial Bridging Loans?
While commercial bridging loans help with business properties or investments, residential bridging loans are specifically for dwellings.
These can include; houses, maisonettes and flats. The property could be your own home, or maybe a buy to let or airbnb.
Related: Using Bridging Loans for Mixed-Use Property Purchases
Regulated vs Unregulated Loans
If you’re borrowing against your home or a property where family members live, you’ll need a regulated bridging loan. These come with FCA protection and stricter rules about affordability checks and loan terms. The maximum term is usually 12 months.
Unregulated loans apply when you’re borrowing for investment properties or second homes. They offer more choice and flexibility but less consumer protection.
Related: Are bridging loans regulated by the FCA?
The Current UK Market
The UK bridging loan market has grown substantially, reaching £9 billion in 2024.
More lenders have entered the market, offering better rates and faster processing times. Average completion times have dropped to 47 days – much quicker than traditional mortgages.
You’ll find various lenders in this space, from specialist bridging companies to private banks. Each has different lending criteria and focuses, which is why many borrowers work with brokers to find the right match for their situation.
When Would You Need a Residential Bridging Loan?
Property opportunities don’t always line up perfectly with traditional mortgage timelines. Here’s when a residential bridging loan might come in handy.
Breaking Property Chains
You’ve found your next home but your buyer’s purchase has hit a snag.
Rather than losing your dream property, a bridging loan lets you complete your purchase. You’ll repay the loan when your current home sells.
Read more: How a chain break bridging loan could help you to move house
Auction Success
Auction properties in the UK need quick action – you’ll need to pay all of the money within 28 days of winning your bid.
For a £500,000 auction property, you’d need to put down a 10% cash deposit (£50,000) on auction day and pay the remaining £450,000 within four weeks. Auction finance helps you meet these tight deadlines.
Read more: How to Finance an Auction Property
Home Improvements
Maybe you want to buy a property that needs work before a standard mortgage lender will consider it.
If your new home lacks a working kitchen or bathroom, mortgage providers won’t be interested. A refurbishment bridging loan can fund these essential improvements, after which you can switch to a regular mortgage.
Related: Can a Bridging Loan Be Used for Renovations?
Racing Against Time
Sometimes speed matters most.
Perhaps you’ve found a property being sold at a discount, but only if you can complete quickly. Or maybe you’re competing with cash buyers and need to show you can move as fast as they can.
Read more: How Quickly Can You Get a Bridging Loan?
Short Lease
Properties with short leases can present unique investment potential.
By using a bridging loan, investors can acquire these properties and immediately add value through a lease extension. This approach offers a clear and viable exit strategy, coupled with a remortgage or sale.
Remember though – quick finance comes at a cost.
While bridging loans can solve timing problems, you’ll need a solid plan for paying them back, whether through selling property or arranging longer-term finance.
Let’s talk bridging loans!
How Residential Bridging Loans Work
Understanding how bridging loans are structured helps you make better borrowing decisions.
They’re a bit different to other secured loans you may have come across.
Loan Structure
You’ll need to offer a property as security for your loan.
Lenders will usually lend up to 75% of your property’s value, meaning for a £500,000 home, you could borrow up to £375,000. Some lenders might go higher if you can offer additional security.
Most loans are set up for 3 to 12 months, though some lenders offer terms up to 24 months. The shorter the term, the lower your overall costs will be. You’ll need to show the lender how and when you plan to pay back the loan – this is called your exit strategy.
Read more:
- Do You Need a Deposit for a Bridging Loan?
- How long can you have a bridging loan for?
- First, Second & Specialist Charges in Bridging Finance
Interest Charges
The interest on your loan is calculated each month, based on how much you owe at the time.
There are a few different ways that the interest charges can be structured, your available options will be up to the lender:
- Monthly payments work just like an interest-only mortgage – you just pay the interest each month. This keeps your final balance lower but needs income to support it.
- Rolled-up interest adds your monthly interest to the loan balance. You’ll pay everything back when the loan ends. This helps if you’re short on monthly income, but your final payment will be higher.
- Retained interest comes out of your loan amount upfront. This means you’ll receive less money at the start, but won’t need to make any payments until the end.
Read more: How Do Bridging Loan Interest Options Work?
Costs and Fees
Besides interest, you’ll pay several other fees:
- Arrangement fees cover setting up your loan. These usually cost 2% of the amount you’re borrowing.
- You’ll need a property valuation to confirm what it’s worth. The cost depends on your property’s value and type.
- Legal work is required to set up the loan properly. Both you and the lender will need solicitors, and you’ll pay both sets of fees.
- Some lenders charge exit fees when you repay the loan.
Make sure you understand all these costs before going ahead – they’ll affect how much you actually receive and need to pay back.
Read more:
Paying it back
The plan you have for paying it back is called your exit plan, and we cover this a bit further down.
Bridging lenders don’t need any monthly repayments, it’s just not worth it as the loans are very short term. At the end of the loan term you will be expected to pay back the original loan, plus any fees and interest that have accrued.
Who Can Get a Residential Bridging Loan?
You might be surprised by who can qualify for a residential bridging loan.
Unlike standard mortgages, lenders look more at your property and exit strategy than your personal finances.
Property Requirements
Most UK residential properties can secure a bridging loan.
This includes:
- Standard houses and flats make up most bridging loan applications. Even if your property needs work, many lenders will consider it.
- Non-standard builds, like timber-framed houses or concrete construction, can work too. Some lenders specialise in these properties when mainstream mortgage lenders won’t help.
- Properties needing renovation are often accepted. If your home lacks a kitchen or bathroom, a bridging loan could help where a mortgage can’t.
Eligibility
You’ll need to be at least 18, and most lenders want borrowers under 85. Beyond that, the main focus is on your exit strategy – how you’ll pay back the loan.
Your credit history does matter, but not as much as with a standard mortgage. Even if you’ve had credit problems, many lenders will consider your application if your property and exit strategy are sound.
Read more:
- Can you get a bridging loan with bad credit?
- Bridging Loans for Pensioners and Retirees
- Can You Get a Bridging Loan Without a Job?
- What Checks Do Bridging Loan Companies Carry Out?
- Do UK Bridging Loans Have Age Limits?
Minimum Requirements
Most lenders look for:
- A property worth at least £200,000
- A clear exit strategy
- Some form of deposit (usually 25-30%)
- Proof you can cover any fees
Self-employed?
No problem. Lenders focus more on your property’s value than your income. Even complex income structures or irregular earnings won’t rule you out if your exit strategy is solid.
Remember – different lenders have different criteria. Some specialise in cases that others won’t consider, which is why speaking with a broker can help you find the right match.
Read more: How Self-Employed Borrowers Can Access Bridging Finance
Where Can You Get Residential Bridging Loans?
The bridging loan market offers several options for borrowing, each with its own advantages.
Let’s look at your main choices.
Specialist Bridging Lenders
Most bridging loans come from specialist lenders who focus solely on this type of lending.
They understand complex cases and can move quickly when needed. While you might not recognise their names like high street banks, many have been lending for years and have solid reputations in the property finance world.
Private Banks
Private banks offer bridging loans too, especially for larger loans. These are set up on a bespoke basis.
They might offer better rates if you’re borrowing over £5,000,000, and they’ll often want to build a longer-term relationship with you beyond just the bridging loan.
High Street Banks
You won’t find bridging loans at most high street bank branches.
While some banks do offer them, they usually handle these through specialist departments and might take longer to approve applications than dedicated bridging lenders.
Related: Do high street banks still offer bridging loans?
Working With Brokers
Many bridging lenders only work through brokers.
This makes sense – bridging loans need careful structuring, and brokers help ensure applications are presented properly.
A broker can:
- Find lenders suited to your specific situation
- Compare terms from different lenders
- Speed up your application
- Handle paperwork and chase progress
- Negotiate better terms
Making Your Choice
Each lender has different specialities. Some prefer standard residential properties, others focus on renovation projects.
Some offer better terms for auction purchases, while others specialise in chain-break situations.
Your best option depends on factors like:
- How much you need to borrow
- Your property type
- How quickly you need the money
- Your exit strategy
Given the short-term nature and higher costs of bridging finance, getting the right deal matters. Taking time to compare options through a broker could save you money and stress.
Exit Strategy Planning
Planning how you’ll repay your bridging loan might seem obvious, but it needs careful thought.
Your exit strategy – your plan for paying back the loan – will affect your chances of approval. For a lender, it’s one of the most important aspects of your application.
Selling Your Property
If you’re planning to sell a property to repay your loan, you’ll need more than just a gut feeling about its value. Recent sales of similar properties in your area provide good evidence for your strategy.
For example, if three-bedroom houses near you sell within 12 weeks for £500,000, that’s solid backing for your exit plan.
You’ll also want to think about:
- Your local market conditions
- Recent comparable sales
- How long similar properties take to sell
- Any seasonal factors that might affect your timeline
Refinancing to a Mortgage
Maybe you’re planning to switch to a regular mortgage.
Start talking to mortgage brokers early – even before you take out your bridging loan. They can check whether your plans look workable and highlight any potential issues.
Consider a real example: You’re buying a property that needs a new kitchen and bathroom. You know most mortgage lenders won’t consider it until the work’s done.
Your exit strategy might involve:
- Three months for renovations
- One month for mortgage valuation and application
- Two months for mortgage processing
That suggests you need at least a six-month bridging term – plus some extra time for safety.
Read more: Can You Pay Off a Bridging Loan with a Mortgage?
Building in Contingency Time
Whatever your strategy, add some buffer time.
If you think selling will take three months, plan for six. If mortgage approval usually takes eight weeks, allow for twelve. This extra headroom can save you stress if things take longer than expected.
Remember – lenders really will look closely at your exit strategy. The more detailed and realistic it is, the better your chances of loan approval.
Alternatives to Consider
Before committing to a bridging loan, it’s worth checking other options that might work for your situation – and possibly save you money.
Standard Mortgages
If time isn’t too pressing, a standard mortgage will work out cheaper.
While they take longer to arrange, you’ll benefit from lower interest rates and longer repayment terms. Many lenders now offer faster completion times than before, especially if you’ve got all your paperwork ready and the LTV isn’t too high.
Second Charge Loans
Already have a mortgage?
A second charge loan lets you borrow against your property’s equity while keeping your existing mortgage in place. You’ll usually pay less interest than with a bridging loan, though still more than a standard mortgage. These can work well if you need money for home improvements or to raise capital.
They are based on affordability, and will require monthly payments over a set term.
Personal Loans
For smaller amounts – say under £50,000 – an unsecured personal loan might serve you better.
While you’ll need a good credit score and income, you won’t have to secure it against your property. The application process is simpler too.
Each option has its place, and the best choice depends on your circumstances. Think about how much you need, how quickly you need it, and what monthly payments you can manage.
Working with a Broker
Finding the right bridging loan involves more than comparing rates online. A specialist broker’s knowledge can prove invaluable, especially if your situation isn’t straightforward, or you are in a rush.
Lots of lenders only accept applications through brokers, giving you access to options you wouldn’t find on your own. Brokers know which lenders suit different situations – whether you’re buying at auction, breaking a chain, or funding renovations.
Your broker will look beyond the headline rates.
They’ll help structure your application to highlight its strengths and explain any complex aspects of your situation. They’ll also spot potential problems early, saving you time and avoiding failed applications.
Good brokers handle the paperwork, chase lenders, and keep your application moving. They’ll often speed up the process by knowing exactly what each lender needs and how to present it.
Next Steps
Residential bridging loans can solve many property-related challenges, but they need careful planning. Start by getting your paperwork in order – proof of ID, property details, and a clear exit strategy.
Allow yourself plenty of time.
If you think a bridging loan might help your situation, speak with a broker who specialises in these loans. They’ll help you understand your options and find the right lender for your needs.
Remember to plan your exit strategy carefully and build in extra time for unexpected delays. With good preparation and the right advice, a bridging loan could help you achieve your property goals sooner than you think.
FAQ
With proper documentation, you can receive funds in 7-14 days.
Read more: How Quickly Can You Get a Bridging Loan?
Yes, as lenders focus more on your property’s value and exit strategy than credit history. However, you will likely face higher interest rates.
Read more: Can you get a bridging loan with bad credit?
Most lenders require 25-30% of the property’s value, though this can vary based on your exit strategy and property type.
Read more: Do You Need a Deposit for a Bridging Loan?
Yes, bridging loans are commonly used for auction purchases, helping meet the typical 28-day completion requirement.
Read more: How to Finance an Auction Property
Yes, you’ll need a solicitor to handle the legal aspects. Most lenders will require you to use a solicitor from their approved panel.
Usually 12 months for regulated loans and up to 24-36 months for unregulated loans.
Read more: How long can you have a bridging loan for?
You must be at least 18, and most lenders have upper age limits around 85.
Read more: Do UK Bridging Loans Have Age Limits?
Yes. The length of the lease might affect your choice of lenders and the interest rate. However, short term bridging is very useful for buying a short-leasehold property and then selling it once you have extended the lease.
Yes, many lenders specialise in properties that standard mortgage lenders won’t consider.
