Bridging loans are short-term, interest-only loans used when timing matters more than cost — buying before you have sold, completing on an auction purchase inside 28 days, or funding a refurbishment that no standard mortgage will touch. The examples below show how that works in practice.
These are illustrative worked examples, not actual client cases. They are included to show how bridging finance is typically structured in common situations. The figures are indicative and every case is assessed on its own circumstances.
A bridging loan is a short-term loan secured on property, used to bridge the gap between buying and arranging longer-term finance or selling an existing asset. Terms typically run from a few weeks to 12–18 months.
They are commonly used for:
Every bridging loan needs a credible exit strategy — the specific way the loan will be repaid. This is the single thing lenders scrutinise most, and the thing most likely to sink an application. Our guide to when a bridging loan is your best option covers the decision itself.
Scenario: a retired couple who have found the bungalow they want, but have not yet sold their existing home.
Loan type: regulated bridging loan
Indicative amount: £325,000
Exit strategy: sale of the existing property
Rather than lose the bungalow to another buyer, the couple borrow against their position to complete the purchase, then repay the bridge when their own house sells. Because the loan is secured against a property they live in, it is regulated by the Financial Conduct Authority, which means the usual consumer protections apply.
The risk to weigh: if the existing home takes longer to sell than expected, or sells for less, the interest continues to accrue. The exit has to be realistic, not optimistic.
Scenario: a landlord buying a terraced house at auction to refurbish and let.
Loan type: unregulated bridging loan
Indicative amount: £155,000
Exit strategy: refinance onto a buy-to-let mortgage once the work is done
Auction purchases usually have to complete within 28 days, which is faster than most standard mortgages can move. A bridge covers the purchase, the property is refurbished, and the borrower then moves onto long-term buy-to-let finance.
The risk to weigh: the exit depends on the property being lettable and on a buy-to-let lender agreeing to refinance it. If the refurbishment overruns, or the valuation comes in lower than hoped, the bridge has to be extended at cost. Our auction finance guide covers this route in full.
Scenario: a first-time developer buying a property below market value to refurbish and resell.
Loan type: refurbishment bridging loan with a drawdown facility
Indicative amount: £210,000
Exit strategy: sale of the property after refurbishment
A staged drawdown releases funds as the project reaches agreed points rather than all at once, so interest is only charged on what has been drawn. For a refurbishment running over several months that can make a material difference to the total cost.
The risk to weigh: development timelines slip and resale values are not guaranteed. A first-time developer with a sale-based exit is taking on both the build risk and the market risk at once.
Scenario: a business owner who needs funds quickly and does not want to disturb an existing residential mortgage on a good rate.
Loan type: second charge bridging loan
Indicative amount: £100,000
Exit strategy: sale of a commercial asset
A second charge sits behind the existing mortgage rather than replacing it, which leaves the original rate untouched. It is a way of accessing equity at speed without remortgaging.
The risk to weigh: you are adding a second secured debt to your home, and the exit depends on selling an asset to a timetable. Think carefully before securing other debts against your home.
Who can get a bridging loan?
Both individuals and companies. Homeowners, landlords, developers and business owners all use bridging finance.
How quickly can one be arranged?
Often between 5 and 21 days, depending on the complexity of the case and how quickly the legal work moves.
Are bridging loans expensive?
Interest rates are higher than on a standard mortgage, because the loans are short-term and the lender is pricing speed and risk. The cost of the bridge should always be weighed against what it lets you achieve — and against the cost of not acting.
How much deposit do I need?
Usually at least 25–30% of the property value or purchase price, though this varies by lender and by the strength of the exit.
What is an exit strategy and why does it matter so much?
It is the specific way you will repay the loan — usually a sale or a refinance. Lenders assess it closely because a bridging loan with no credible exit becomes an expensive problem. A weak exit is the most common reason an application is declined.
Is bridging finance regulated?
It depends. A bridge secured on a property you live in is generally regulated by the Financial Conduct Authority. Most bridging on investment and commercial property is not, and we will tell you clearly which applies to your case.
Bridging finance is a useful tool used well and an expensive one used badly, and the difference is almost always the exit strategy. We will tell you honestly if a bridge is the wrong answer for your situation.
We are an independent, whole-of-market mortgage broker at Beehive Works in Sheffield, authorised and regulated by the Financial Conduct Authority (FRN 650114). You can read more about bridging finance on our main page, and our fees, including what we charge for bridging, are set out in full before you commit to anything.
Call 0114 303 1031, email info@friendscapital.co.uk, or get in touch through the website.
Most bridging finance is not regulated by the Financial Conduct Authority. Your property may be repossessed if you do not keep up repayments on a loan secured against it. Think carefully before securing other debts against your home.