What a bridging loan is for
A bridging loan provides short-term funding secured on property, usually for 1 to 24 months. It covers a gap: between buying and selling, between auction and mortgage, or between purchase and refurbishment.
Open and closed bridges
A closed bridge has a fixed repayment date, often because a sale has already exchanged. An open bridge has no fixed date but must be repaid within the maximum term. Closed bridges are usually cheaper because the exit is more certain.
How interest is charged
- Retained: interest for the term is deducted from the advance upfront
- Rolled up: interest is added to the balance and repaid at the end
- Serviced: you pay interest monthly, as with a normal loan
Regulated or unregulated
If the property is, or will be, your home or a close family member's home, the bridge is regulated by the FCA and comes with extra protections. Bridges on investment, commercial or development property are generally unregulated.
The exit is everything
Lenders will ask how you will repay. If your sale falls through or a refinance is declined, you may face default interest or extension fees. Build in time and have a back-up plan.
Common questions
How much can I borrow on a bridge?
Often up to 70% to 75% loan-to-value on standard property, sometimes more with additional security.
Can I use a bridging loan to buy at auction?
Yes. It is one of the most common uses because auctions usually require completion within 28 days.
This guide is general information, not personal financial advice. If you are worried about debt, free help is available from MoneyHelper, StepChange and Citizens Advice.
Try it: Bridging Loan Calculator