Bridging Loan

Finbri > Bridging Loans

We're bridging loan specialists

We arrange fast bridging finance secured on residential or commercial property and land that can be used for almost any purpose.

Our bridging loan service

• Market-leading property bridging loans from £26,000 to £250m
• Monthly interest rates from 0.44% pm
  (Lower rates for £700,000+ loans or less than 50% LTV)
• LTVs up to 80% (up to 100% finance if additional collateral is available)
• Automated valuation options and dual legal representation
• No monthly payments with interest rolled-up options 
• Terms up to 24 months

Get a quote

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We provide a fast reliable service to help you get the bridging finance you need at the best available rates.

We consider all types of credit history including non-status, bad or adverse and don't perform automated credit checks so there's no footprint from enquiring.

With incredible relationships with the UK's top lenders including specialist lenders, family offices and private investors, we can source the bridging loan you require:

up to £300k loans in 3 days
up to £700k loans in 7 days 
up to £250m from 14 days

Where your timeline is critical and short, we're confident we can get your bridging loan in place. Get your best no obligation quote today.

Call me back

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Bridging loan uses

Residential property bridging loans
Bridging finance for property purchases such as 
fixing chain breaks or mortgage delays, buy to let, HMO, student lets, buying a property with a short lease, property flips and investment purchases

Commercial property bridging loans
Commercial bridging finance for property purchases including semi-commercial properties

Fast auction bridging loans
bridging finance for fast property purchases of residential, semi-commercial and commercial at auction, safeguarding your 28-day completion

Light refurbishment bridging loans
bridging finance for purchasing uninhabitable property, financing permitted development, loans for modernising & doer-upper properties

Heavy refurbishment loans
financing change of use, extensions, HMO conversions, basement developments, roof top development, loft conversions, commercial to residential conversions & barn conversions

Development finance
financing Land purchases, property development finance and development exit finance

Bridging loans for business purposes
Paying tax bills, raising capital for investing in plant, purchasing a business premises, property portfolio purchases or business cashflow

Second charge loans
such as second charge bridging loans or mezzanine finance

UK expat bridging loans and for non-UK citizens

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Bridging loan lending criteria

 

Bridging loan guide

If you're unsure what a bridging loan is, how it can be used or how it works, we've created an easy to understand guide to bridging finance.

What's a Bridging Loan?

Let's start with the basics. A bridging loan is a type of short-term finance that's typically borrowed in order to bridge a gap in someone’s financing - hence its name. It's also sometimes called a 'bridge loan' or 'bridging finance' in the UK. 

Whilst a bridging loan can be used for almost any purpose, a recent survey of over 1000 people showed that It's usually used to finance a property transaction. In fact, 38% of people used it to purchase a main residence and a further 31% had used it to purchase an investment property.

And whilst it can be secured against different types of assets, a bridging loan is typically secured against one or more properties.

How does a bridging loan work?

Most people don't have large sums of liquid cash immediately available, as that cash is usually already tied up in another investment, such as a property. 

There are many instances where you might need to quickly access that equity in the property, and this is where bridging loans can be useful.

A bridging loan works by a lender loaning you their cash temporarily, in return for: 

• a charge on your assets, typically property; and
• a payment for arranging the loan, by way of fees and interest; 
• and agreed method of how the debt will be repaid.

The repayment will usually be by freeing up cash from the sale of other assets or securing a long-term financing arrangement, such as a buy to let mortgage. 

A detailed explanation of the bridging loan process can be found a bit further down on this page but if you’re short on time here’s a quick summary:

If you use a broker, and there are several benefits of using a bridging loan broker, then they'll listen to what you’re trying to achieve, offer advice, package up your application, source the right bridging lenders for your situation and find the best rates available.

You’ll then choose from the options presented and decide which lender and loan proposal best meets your needs. 

After the lender completes their checks, which is known as due diligence, on you and the property you’re offering as security, they’ll complete a valuation and instruct lawyers to complete the legal work. The bridge loan will then be ready for you to draw down.

You’re now able to use that money the purpose you’ve agreed with the lender. Bridging loans have many uses, but it’s typically for the property investment i.e. Purchasing and/or refurbishing or converting property.

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How long can a bridging loan be borrowed for?

The majority of bridging loan terms are 12 months or less, however it can be taken out for between 1 to 24 months.

A bridging loan is always intended as a short-term financial product that helps you to get from A to B. Our recent survey showed that 6 months was the most popular bridging loan term (22% of respondents).

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What can a bridging loan can be used for?

Bridging loans are a super versatile short-term financial product that can be used for almost any purpose.

Here are just a few of the popular uses, both in the UK & in Europe:

Property Purchases & Refurbishments

A bridge loan can be used to finance the purchase and refurbishment of residential, business or commercial property.

Auction Purchases

Bridge finance is well-suited to auction purchases due to the fast arrangement of the bridging finance and the speed of the draw down of funds that helps you complete your purchase within the 28-day time limit.

Fixing a property chain break

If you're purchasing your next home but your sale has fallen through, and you don't want to lose your next property, a property bridging loan can be used to finance the purchase of the property before yours sells and save the property chain from falling apart.

Buying a property to flip

The process of purchasing a property, completing renovation work and then selling on for a profit - all possible via bridging because of the short-term nature of bridge loans.

Buying a property to convert

Whether it’s converting a residential property into apartments or an HMO, or a commercial property into dwellings bridging loans can be used to finance both the purchase and conversion of the property.

Buying a property to rent out

The process of purchasing a property, possibly completing a refurb, and then refinancing onto a buy-to-let mortgage - a bridging loan can make this possible.

Buying an unmortgageable property

A property that's not at the standard that a traditional mortgage would require, yet it's totally possible with a bridging loan.

Once the refurbishment or renovation is completed then the property can be refinanced using a traditional mortgage and the bridging finance paid off.

Buying a property at auction

Typically, with an auction purchase, you're required to purchase the property within 28 days. You simply wouldn't be able to do this with a traditional mortgage. Auction finance is a type a bridging loan used to purchase property at auction.

Buying a property with a short-lease

Mortgage lenders will typically decline to offer a mortgage on a property where the lease remaining is less than 80 years.

As such, sellers of properties with short leases often fail to realise the true market value of the property because they’re only able to attract ‘cash-buyers’.

Buying a property with a short-lease can offer both first-time buyers and property investors a good opportunity of buying below market value and then, relatively quickly, increasing the value of the property.

Bridging loans can be used to both purchase property with short leases remaining as well as financing the lease extension itself.

Buying land

Land with or without planning can be purchased with bridging loans, including development parcels, commercial, brownfield and agricultural land. Often purchasing land is a time-critical opportunity and as bridging loans are quick their use appeals to land speculators and developers alike.

Downsizing your property

A bridging loan can facilitate the purchase of a smaller property in value, prior to the sale of your current property.

Paying care fees

Clients are often required to pay quite substantial care fees whilst their property is being sold. Bridging loans can be used to raise cash quickly until the property is sold.

Non-property purposes

Bridging loans are often used for raising cash for business or commercial uses, such as: 

• purchasing equipment or stock
• investing in infrastructure and plant
• financing a management buyout
• paying VAT bills or settling Corporation Tax.

Personal uses might include: 

• paying unexpected bills
• paying self-assessment tax or capital gains tax bills
• paying inheritance tax
• arranging a divorce settlement.

These examples aren't exhaustive but give you some idea to bridging loan's versatility.

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How much can I borrow with a bridging loan?

How much you can borrow using a bridging loan varies case by case, but there are a few basic concepts worth familiarising yourself with.

Bridging loans typically range in size from £25,000 up to £10 million, but there's no actual upper limit.

Some bridging loans have been in excess of one billion, but these are few and far between.

Your bridging loan amount will largely depend on:

• how much you want to borrow
• the available equity in your property
• the maximum loan-to-value (LTV) for your property type as each has different LTVs 
• and what your lender is willing to lend in your specific circumstance.

Usually the most you’ll be able to borrow will be 80% LTV secured on one property, another way to put this is for every £100,000 of equity you have in a property, you can borrow up to £80,000. You can use our bridging loan calculator to find out indicative costs of a bridging loan.

Our recent survey showed that 7% of bridging loan borrowers received their loan within 1 week, but the most frequent length of time (20% of borrowers) it took to complete was 2-3 weeks from application.

How to maximise your bridging loan borrowing 

98% of bridging loan users want to maximise their borrowing - the most important factor according to our recent survey.

So it's good to know that we know how to help you maximise your borrowing potential. If you're looking to borrow as much as possible, then as a bridge loan broker, our job is to maximise your borrowing potential, and source the right lender for you so your rates are as low as possible.

Where you’ve multiple properties to put up as collateral then you may well be able achieve 100% of your bridging finance requirements.

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What does a bridging loan cost?

The cost is typically made up of interest on the loan, which is normally calculated monthly, plus a range of fees.

There are more than a hundred lenders in the UK ranging from private investors, equity firms, high street banks and family offices, and each of their requirements for bridging loan criteria differ.

Some lenders finance specialised loans in very niche circumstances, whereas others only provide bridge loans for low-risk clients.

The cost of the bridging loan will be determined which lender you choose, how many lenders are vying for your deal, your specific needs and your borrowing profile. 

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What are bridging loan interest rates?

The interest rates for bridging loans in the UK currently range from 0.44% per month to 2% per month.

Higher value loans such as those above £700,000 can attract better rates, as can lower LTVs that are sub-50% due to the reduced risk of the loan.

What are the interest options with a Bridging Loan?

The cost of the loan will also be influenced by the type of interest you choose. There are three interest options:

• Serviced interest
• Retained interest
• Rolled-up interest

Typically, in all instances, the capital sum is only repaid at the end of the term.

The reason for this is that the purpose of the loan often means the borrower doesn't have the cash to service the debt each month, but instead relies on the sale or refinance of an asset in order to pay off the loan.

This event of repaying the debt at the term end is known in the industry as the exit strategy.

And a viable bridging loan exit strategy is a requirement of the loan before taking out the finance.

Let’s take a look at the interest options.

Serviced interest

This is possibly the easiest to understand, as the interest is paid monthly in a similar method to many traditional high street mortgages. As the interest is paid off each month it doesn’t compound, reducing the total cost of the loan.

Retained interest

With this the borrower isn’t required to make any monthly interest payments.

Instead, from the outset, the lender adds all the interest to the balance of the loan and effectively pays the interest itself when it falls due at the end of each month.

So, the borrower is borrowing both the capital sum and the interest, as such interest is applied to both.

Rolled-up interest

Similar to retained interest, the lender rolls up the interest and adds that interest to the balance of the loan at the outset so again there are no monthly interest payments.

The difference between rolled-up interest versus retained interest is that the lender doesn't charge interest on the interest already added to the loan.

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What are bridging loan fees?

Aside from the interest of a bridging loan, in the UK these loans typically come with a range of additional fees and charges.

These can include:

• arrangement fees
• broker fees
• valuation fees
• legal fees
• early repayment charges
• exit fees

Let’s look at each of these bridging fees in more detail:

Arrangement fees

Also known as facility fees, these are charged by lenders at the start of a loan agreement to cover the work involved in setting up the loan.

These fees are typically 1-2% of the loan amount.

Broker fees

Broker fees are charged by bridging loan brokers at the start of a bridging loan agreement to cover the work involved in preparing the borrower's application and sourcing the most competitive options.

The broker will present the borrower's case in the best possible light to create interest and where possible will seek to generate a competitive marketplace for the deal between multiple lenders which offers the borrower the most beneficial outcome.

It's important to acknowledge that with bridging loans, the most beneficial outcome may not necessarily be the cheapest as it may come down to the maximum loan available or the specific terms of the finance.

Valuation fees

Valuation fees cover the cost of assessing a property's value and condition, which is done to determine how much they are willing to lend against it.

Fees vary depending on the size and complexity of the property but can range from two hundred pounds to one thousand pounds or more.

Whilst every in-person valuation will be completed by an RICS-assessed surveyor, some lenders require the valuation to be completed by a company from their valuation panel.

For this reason, before getting a valuation on a property it's worthwhile to know which surveyor your lender will want to use.

Asking whether you can have a copy of the valuation report could also be of benefit to you.

Should that lender not approve your finance then you could potentially negate further valuation fees as some lenders are willing to use valuations providing they're within a certain time-frame i.e. less than 3 months old.

This however is typically only applicable to residential bridging loans as commercial bridging loans will always require a valuation.

Legal fees

Legal fees cover the cost of legal advice and customary paperwork associated with a loan.

These fees can range from several hundred to several thousand pounds depending on the complexity of the situation.

Early repayment charges

Whilst rare, early repayment charges (also referred to in the industry as ERC) may be imposed by some lenders if you pay off your loan before its due date.

These can range from 1% to 5%, depending on how early the loan is repaid.

Exit fees

Exit fees are charged by some lenders when you pay off your loan.

These are typically 1% of the amount outstanding at the time of repayment.

It's also worth noting that not all lenders charge all fees and some lenders have different ways of charging the fees outlined here.

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Property types & their LTVs

Typically, the types of property that attract the lower interest rates for bridging loans are (in this order):

• Residential property LTVs
• Mixed-use or semi-commercial property LTVs
• Commercial property LTVs
• Land that has planning LTVs
• and lastly Land without planning LTVs

As a ballpark, lenders will typically only offer a maximum loan-to-value of 80% on one property.

If you want to achieve a higher loan amount you can put more collateral into the deal, which would usually be in the form of another property. With additional properties in the loan, it’s possible to achieve 100% of your bridging finance requirements.

Let's look at the different property types and the different LTVs they offer.

LTVs For Residential Property Bridging Loans

In the UK, residential property is considered the safest property asset.

Over the long term, a residential property appreciates in value and is considered a safe investment.

There are many people who are in the market to purchase or rent dwellings.

As such, this is also why lenders will often be willing to lend up to higher LTV ratios on residential property - typically up to 80%.

Not all residences are created equal though.

A property in a prime location will always attract better rates than one that is next to a major trunk road or motorway.

LTVs For Mixed-use (Semi-commercial) Property Bridging Loans

For the same reasons as residential properties being attractive security for a loan, mixed-use property (also known as semi-commercial) has an element of a residential dwelling incorporated into the building.

The actual LTV will vary from lender to lender, but as a guide, it's similar to Commercial Property at 65% LTV.

LTVs For Commercial Property Bridging Loans

Commercial property varies greatly as to whether a lender deems it desirable security, hence why only up to 65% LTVs are typically offered.

Even then, the type of use class it has, whether it's a restaurant, hotel, cafe, forecourt, golf club… you get the idea, all impacts its value to the lender.

Of course, the location and demand for that property type will play a significant role in its resale ability.

LTVs For Land with Planning

Land with planning is typically sought after with developers eager to snap up the opportunity.

Developers tend to look for undeveloped land for speculation.

There are many companies in the UK that specifically seek out these 'land-banking' opportunities and for this reason, they’re usually appealing to lenders.

However, it's unrealised potential and lenders aren't developers so will price their interest rates accordingly and only typically go to a maximum of 70% LTV - but that will depend on whether the planning is for residential or commercial use.

LTV For Land without Planning

Land without planning may not appear at first glance as attractive as land with planning, however, that largely depends on what kind of opportunity the land presents.

Half an acre of agricultural land is not going to be as desirable as half an acre of land for potential development.

However, each will hold a value and finding the right specialist lender will make all the difference to the loan amount you can achieve.

There are lots of opportunities with land, be it potential garden plots for development, parcels of land adjacent to farms for developing additional revenue streams such as equestrian centres or farm shops, or even strategic purchasing of brownfield plots.

We say brownfield because since the Environment Act 2021, the UK’s seen a gold rush for brownfield sites too, due to developers now being required to offset the green spaces they build upon reducing the environmental impact of their builds.

Land without planning tends to attract a maximum of 50% LTV.

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What's the difference between 1st or 2nd charge bridging loans?

A charge on a property simply contains the details of any burdens affecting that property,

This could be restrictive covenants (such as restrictions on the use of the property), positive covenants (such as obligations to maintain a fence or driveway), or debt obligations such as loans and mortgages.

The term Mortgage comes from Latin and literally means 'death pledge’.

So, that’s a pledge to repay the debt until the debt’s death.

Mortgages are legal agreements by which a lender lends money at interest in exchange for taking the title of the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt.

When it comes to bridging, the charge will be a type of mortgage and whether the mortgage is a 1st, 2nd or 3rd charge simply infers which lender gets repaid first should the borrower default.

Technically there’s no limit to the number of charges you could have on a property, but it’s typically not more than three.

A 1st charge bridge is the principal loan on a property, and it takes precedence over all other charges.

A 2nd charge loan meanwhile is secured against a property that already has a loan or mortgage outstanding.

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How do I apply for a bridging loan?

The process of applying for bridging loans can be broken down into the following five steps.

Step 1. Initial consultation call

This is where we understand what it is you're trying to do and your circumstances.

During this call you'll receive an indicative proposal with terms of what this finance might look like in terms of costs, timeline and fees.

Step 2. Application

We'll liaise with you to collate all the documentation the lender will require from you.

We'll package up your case in the best possible light, ensuring that the lenders we approach see the value in your loan.

We'll only approach the lenders we know who will be interested in your loan.

We aim to find multiple lenders to provide offers to you and create a competitive market for your deal.

Step 3. Decision in principle.

Our lenders confirm that they're happy with the terms we've provided to you subject to valuation and legal work.

Step 4. Valuation & legal work.

We'll confirm whether a desktop valuation or a physical valuation will be required for your property being used as security and then, if required, instruct surveyors.

Next, it's over to the solicitors to complete legal due diligence, including any searches on the property.

Step 5. Pay out.

You're lender, in conjunction with you and your solicitor, will confirm the date and time of completion and organise the transfer of funds for that date.

Step 6. Exit.

3 months before you exit your bridging finance facility, our team will contact you to check your exit strategy is still viable. Ideally, you'll be preparing to repay your bridging loan, however, if your original exit is looking unlikely then we can look at helping you re-bridge your bridging loan facility to buy more time.

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How long does it takes to arrange a bridging loan?

One of the real advantages of bridging loans is that, in many cases they’re incredibly quick to arrange. They're possibly the quickest form of short-term finance for large sums that you can access in the UK.

From initial enquiry to receiving the finance in your account, the average time frame for a bridging loan to complete is two to four weeks. In urgent scenarios, however, we can complete bridging loans in a matter of hours.

For example:

• For bridging loans up to three-hundred thousand, we are able to complete these in just 72 hours
• And for up to seven-hundred-thousand, we can complete these, in just five working days.

How are we able to turn around bridge loans so quickly?

We're strong at all key aspects of securing your short-term finance.

But there's three critical factors that really matter in urgent cases.

1. We know which lenders want which bridge loans. For fast bridging loans specifically, we have several lenders whose focus is purely time-sensitive lending.
2. We're good at packaging a bridge loan so the lender doesn't have to do much ground work to understand the value in lending to you.
3. Our tried and tested processes cut out the red tape and delays from Surveyors and from Solicitors.

For example:

According to the latest 2023 survey from Ernest & Young, 81% of bridging loan providers said protracted legal work was the biggest cause for bridging loan delays.

So, in urgent finance we can use joint legal representation, also known as dual representation, that almost entirely mitigates that issue.

The same EY survey also showed that 37% of bridging loan providers cited Valuer response times as the third biggest cause for bridging loan delays.

To overcome that, we can replace in-person valuations with automated valuations, which shaves off an incredible two weeks of more from the process.

Close contact with all parties and effective case management, helps ensure your bridging loan application stays on track. 

With a combination of these options, automation tools, knowledge and expertise we can help speed up the process of you obtaining a bridging loan.

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Bridging loan criteria & your eligibility

If you're unsure whether you'd be eligible for a bridging loan, the good news is that the eligibility criteria are very straightforward.

Here's the summary.

• Bridging loans are available to UK residents and non-residents, including expats and foreign nationals.
• They’re available to Individuals and Companies such as Special Purpose Vehicles.     

There are just three key conditions that need to be met:

1. You'll need to own or part-own a property.
   
   The majority of bridging loans are secured against property. Whilst the property could be located outside of the UK, there are more lenders willing to lend on UK property than overseas.
    
2. The property must have enough available equity in it to achieve an LTV ratio that fits within the bridging loan lender's LTV limits.
   
   Typically, the highest LTV is 80%. So, if you own a property that's worth two-hundred and fifty thousand pounds, and it has no other borrowings on it, then the maximum bridge loan amount would be two hundred thousand pounds.
   
   Another way to look at it is for every hundred-thousand pound of equity you have in your property, the maximum you could borrow would be eighty thousand pounds.
    
3. You must have a realistic exit strategy.
   
   An exit strategy is how you intend to repay the bridging finance at the end of its term. Unlike mortgages, with a bridging there are typically no monthly repayments. Instead the full repayment is usually made at the end of the bridging loan term, in one lump sum. As such, the lender will expect the borrower to have a reliable method of repaying the debt when the bridge loan ends to avoid default.

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Non-status & bad credit bridging loans

The good news is that your credit history isn't necessarily going to stop you from obtaining a bridging loan.

This includes bad credit, or adverse credit and non-status. 

Non-status credit simply means that you don’t have much in the way of a credit history.

Whilst non-status lending isn't an issue for bridging lenders, if you have a lighter credit history, some lenders may perceive you as having higher risk of default, which can reflect in slightly higher interest rates being offered.

Bankruptcy, CCJ's, or adverse credit are also not necessarily a big problem for bridging lenders, but again be prepared to pay a higher rate of interest as lenders may perceive you as having a higher risk of default.

If you’ve bad credit, adverse credit or even no credit history, then my advice is simply to be open about your circumstances.

We can often find a way to position your case with lenders where the merits of your application shine through and help you get the best rates.

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Is proof of income required for a bridging loan?

Proof of income isn't usually a requirement for obtaining a bridging loan, although there are some exceptions.

The few instances where you will need proof of income when it comes to obtaining a bridging loan are:

• if your exit strategy is linked to your income,
• where you choose a serviced interest option,
• or the bridge loan is a regulated product.

In most other cases the application won’t rely on your income because your bridging loan will more likely be repaid through the sale of a property or refinancing it.

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What's the difference between a regulated bridging loan Vs unregulated?

Put simply: a regulated bridging loan is regulated by the Financial Conduct Authority (also commonly known as the FCA), whereas an unregulated bridging loan is not.

Unregulated bridging loans

If the security you intend to use is an investment property, such as a tenanted residential property or a commercial property, then an unregulated bridging loan is suitable.

Regulated bridging loans

If on the other hand, if the property being used as security for the bridging loan is your main residence or close family members reside in it, then the bridge loan must be regulated.

Regulated bridging loans typically take longer to arrange simply because of the additional checks that must be carried out for the applicants.

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Open or closed bridging loans explained

Closed bridging loans have a set date upon which the finance will be repaid, which is typically not more than twelve months, but can be up to twenty-four months.

Most bridging loans are closed bridging loans.

Open bridging loans simply don’t have a set repayment period. This means you can decide how much to pay off and when.

You'll still need an exit strategy, but just not a fixed date for it.

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What are bridging loan exit strategies?

In order to take out a bridging loan in the first place, you'll need a viable robust exit strategy.

This is typically either the sale of the asset or the refinancing of the asset onto a longer-term finance such as a mortgage.

If you've an alternative repayment proposal, we'll work hard to find a lender who'll accept it.

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We're experienced financial experts who arrange short term bridging loans for property owners, securing you the best deal from over 200 bridging loan providers including private investors and family offices.

Get expert assistance today, we're on hand to answer any questions about bridging loans.

Get a quote

Call our friendly team on 01202 612934, we're ready to help.