Bridging Loans Explained (For Property Buyers)

A bridging loan is a short-term loan secured against a property, used when you need money for a specific purpose before a longer-term solution kicks in. It bridges the gap. The classic example: you've found your next home but haven't yet sold your current one, and you don't want to lose the new house. A bridging loan lets you buy now and repay later when the old house sells. It's a useful tool, but expensive and not for everyone.

How a bridging loan works

Bridging loans are typically short, anywhere from 1 month to 24 months. They're secured against a property (the one you're buying, the one you already own, or both), and they're interest-only by default. You don't pay the loan down month by month; you pay it off in one lump when the bridge closes.

Two ways to handle the interest: pay it monthly as you go (called 'serviced' interest) or roll it up and pay it all at the end alongside the principal (called 'retained' or 'rolled-up' interest). Rolled-up is common because the borrower often doesn't have surplus cash flow during the bridge period.

Open vs closed bridging loans

Closed bridges have a defined exit date, for example, completion of a property sale that's already exchanged. The lender knows when the money will arrive to repay them. Closed bridges are cheaper and easier to arrange.

Open bridges have no firm exit date, you intend to repay when 'something' happens (selling a property that hasn't even been listed, refinancing onto a long-term mortgage 'at some point'). Open bridges are riskier for the lender, more expensive for the borrower, and shorter in maximum term.

Typical rates and fees

Bridging loans are expensive. As at mid-2026, typical pricing looks like:

On a £200,000 6-month bridge, the all-in cost can easily be £15,000-£25,000. The maths still works out for some buyers, but only when the alternative is losing the property you want.

• Interest: typically 0.6%-1.5% per month (7-18% annualised).
• Arrangement fee: typically 1.5%-2% of the loan, deducted from the advance.
• Exit fee: sometimes 1% of the loan, but increasingly absent.
• Valuation, legal and broker fees: typically £2,000-£4,000 total.

Common uses

Bridging loans get used for a handful of specific scenarios:

• Chain-breaking: you've found a buyer for your house but they've pulled out and you'd lose your purchase. A bridge lets you complete now and sell separately.
• Auction purchases: traditional auctions require completion in 28 days. Most regular mortgages can't move that fast, bridging can.
• Property in poor condition that won't get a mortgage offer until refurbished. Buy with bridging, refurbish, then remortgage onto a standard product (a 'bridge to let' or 'bridge to refurb' strategy).
• Buy-before-you-sell when you've found the perfect next house and don't want to miss it.
• Below-market-value purchases where you can buy quickly at a discount, then refinance at the higher market value once the loan is on standard terms.
• Probate sales where executors need to convert a property to cash on a timeline.

Regulated vs unregulated bridging

Bridging loans split into two categories:

Most chain-breaking and buy-before-you-sell scenarios are regulated. Investor-purchasing-via-BTL situations tend to be unregulated.

• Regulated bridging, when the loan is secured against a property you currently or intend to live in. Covered by the FCA, with all the usual consumer protections and affordability rules.
• Unregulated bridging, when the loan is secured against an investment or commercial property. Outside FCA scope. Often used by professional landlords and developers.

Alternatives to consider first

Before taking out a bridge, check whether any of these work:

• Porting your mortgage to the new property. If your current mortgage allows porting, you can transfer the deal and add a top-up at the lender's current rate. No bridging needed.
• Let-to-Buy: convert your current home to a buy-to-let mortgage, releasing equity to deposit on the next. Cheaper than bridging because you're moving onto a normal long-term mortgage.
• Second-charge mortgage: a separate loan secured against your existing property's equity, used as deposit. Cheaper than bridging if the timeline is longer.
• Family help: a short-term loan from family while you sell, even if just a few weeks, can avoid all the bridging fees.
• Renting temporarily between: sell first, rent for a few months, buy second. Removes the chain entirely, a 'cash buyer' on the new purchase often wins out over higher offers from chained buyers.

How to get a bridging loan

Bridging is a specialist market. Most high-street lenders don't offer it; bridging lenders are typically specialist firms accessed through brokers. The application process is faster than a standard mortgage, often 7-21 days from application to drawdown, because bridging lenders focus mainly on the security (the property value) and the exit (how you'll repay), not on traditional income-based affordability.

Have a clear exit plan ready, what's repaying the loan, and when. The cleaner the exit, the cheaper the bridge. A broker who specialises in bridging can usually access better rates and terms than going direct.

Bridging loans aren't right for most buyers, they're expensive and meant for specific situations. But when they fit, they fit very well: an auction purchase, a chain-break, a buy-before-you-sell where you'd otherwise lose the property. If you're weighing up whether a bridge makes sense for your situation, Debbie at DS Financial can run the numbers, check if a cheaper alternative would work, and access specialist bridging lenders you can't go to directly.

General information, not financial advice. Your home may be repossessed if you do not keep up repayments on your mortgage.

Sources: FCA, Bridging finance, MoneyHelper, Bridging loans, Bridging & Commercial, Industry data.